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Update: Today, Bask Bank increased its mileage earning rate to 2.5 American Airlines AAdvantage® miles per $1 saved per year. That makes now a great time to revisit this post on whether it's better to earn 2.5 miles or 5.1% APY interest.
Interest rates are going up. While that's bad news for borrowers, anyone with savings should be happy to see interest rates rise from near zero. Not all banks have proactively raised the interest rate on savings accounts (the national average is just 0.46% APY as of October 16, 2023).
However, we're happy to see that Bask Bank has progressively increased the return on its Interest Savings Account from an initial 0.60% to 5.1% annual percentage yield (APY). And now Bask has raised the earning rate on the Bask Mileage Savings Account to 2.5 AAdvantage® miles per $1 saved per year
With cash interest rates increasing, we figured this is a good time to circle back to the question: is it better to earn miles, cash interest, or a bit of both from your savings?
The Case for Earning American Airlines AAdvantage® Miles
If you're a longtime reader of AwardWallet, you'll know that this is a topic that we've written about a couple of times. Last year, we made a case for why earning AAdvantage® miles beats earning interest for those who know the AAdvantage® program well. And this still holds true. When you consider the value of AAdvantage® miles and the tax implications of earning miles versus interest, it's still going to make more sense for many travelers to earn miles.
And that’s exactly what I’ve chosen to do with my savings. I still personally hold much of my cash savings in a Bask Mileage Savings Account because I continue to get excellent value from AAdvantage® miles.
For example, last year, I redeemed 75,000 AAdvantage® miles to book a Qatar business class award from South Africa to Los Angeles. That redemption gave me more than 24 hours in Qatar's incredible Qsuite — and I can confirm that this award-winning business-class product doesn't get old.
Flight: QR739 from Doha (DOH) to Los Angeles (LAX)
Aircraft: Airbus A350-1000 (A7-ANK)
Lounge: Al Mourjan (Qatar biz class)
Cost: 75k AA miles + $59.55 taxes from JNB-LAX
Wi-Fi: $10 for full flight, practically unusable
Notes: 15:46 hrs in-flight, 6th longest flight I've flown pic.twitter.com/tRLsxYmdV6
— JT Genter (@JTGenter) February 4, 2022
But, it's not just international premium cabins where you can get a good redemption. I also redeemed just 9,500 AAdvantage® miles to book a Web Special Award from Colorado Springs to Atlanta during President's Day Weekend. Due to the holiday, cash rates were over $300 each way. That means I saved at least 3 cents per mile on this simple domestic redemption.
And it's these kinds of dynamically priced that show that American Airlines' dynamically priced awards aren't always bad.
For example, per American Airlines' old award chart, ultra-premium flights between New York and Los Angeles should cost 32,500 miles one-way in Flagship Business or a whopping 57,500 miles each way in Flagship First. Yet, you can sometimes redeem as few as 26,500 miles for business class and 39,000 miles for first class.
The Case for Earning Cash Interest
Earning airline miles isn't right for everyone — and AAdvantage® miles are no exception. Travelers that know how to use the AAdvantage® award chart can put their miles to use at a higher value than the cash they'd earn from interest.
However, you may not have the time or desire to stay up-to-date with the best redemptions in the AAdvantage® program. Or, you may not want to dig for award availability. In either case, the simplicity of earning cash interest may be more appealing.
Also, to put it diplomatically: American Airlines isn't everyone's favorite airline. While you can also use AAdvantage® miles to book 22 partner airlines, most of these partners are international. If you're sticking to domestic flights and don't want to fly American Airlines or Alaska Airlines, earning cash is clearly the better choice.
American Airlines presence at your home airport may also have a big impact on your strategy. If one of American’s domestic competitors offers more nonstop destinations, it could make more sense to earn interest and pay cash for a direct flight rather than accumulate miles that often require a connection.
Lastly, it's possible to have more AAdvantage® miles than you can put to use in the short term. If you’re already earning lots of miles through business travel (or one of the many other ways to earn AAdvantage® miles), it’s a good idea to consider whether your current balance will cover your needs for the foreseeable future. If so, you can put your savings to work earning cash interest that you can spend on other types of travel expenses.
The Case for Earning Both Miles and Cash Interest
Of course, you don't have to decide to only earn AAdvantage® miles or cash interest. You can earn a bit of both! We recently laid out several reasons why it makes sense to sign up for a Bask Mileage Savings Account and a Bask Interest Savings Account, including:
- Easily changing your miles vs. cash strategy
- Earning cash to cover taxes and fees on awards
- Earning enough cash interest to cover taxes on the miles you earn
Let's focus on a few other ways to think about whether to earn miles, cash interest, or both.
Keeping your AAdvantage® Miles from Expiring
The simplest reason that you should open a Bask Mileage Savings Account is to easily keep your American Airlines account active.
American Airlines AAdvantage® miles expire if you don't have activity on your account in the past 24 months. That sets American Airlines apart from other airlines — such as Delta, United, and Southwest — whose miles and points don't expire.
During the pandemic, American Airlines paused the expiration of miles. But that pause only lasted through March 31, 2022. That means that AAdvantage® miles started expiring again as of April 1, 2022. April Fools Day timing aside, this is no joke!
Bask Bank makes it easy to avoid AAdvantage® miles expiration. By depositing just $10 in a Bask Mileage Savings Account, you'll earn around 2 miles per month. That activity will keep your AAdvantage® miles from expiring for as long as you keep your Mileage Savings Account.
Save Toward a Particular Award
Of course, there are many good reasons to keep more than $10 in your Bask Mileage Savings Account. Another strategy for allocating your funds would be to make a specific mileage goal for a future trip.
American Airlines still publishes an award chart with fixed prices from one region to another when you are flying with one of its partner airlines. Although these prices are subject to change, it doesn’t happen very often. And that gives you a great starting point to plan your savings allocation with a partner award flight in mind.
If your travel goal requires flights operated by American Airlines, it can be more difficult to figure out how many miles you’ll need. For American’s own flights, the cost in miles fluctuates with demand — much like the cost of airfare when paying cash. It’s still a great strategy to use your Bask Mileage Savings Account to get closer to your goal. But you’ll want to build in some extra time in case the price in miles goes up.
Flying to the Maldives
Say you want to fly to the Maldives. There's arguably no better way to do so than in Qatar Qsuite. And there's no better program to book Qatar Qsuite to the Maldives than AAdvantage®. A one-way, business-class award will cost you 70,000 AAdvantage® miles.
Say you currently have 115,000 miles in your account. You still need to gather another 25,000 miles to book a round-trip award — or one-way for two passengers.
The easiest way to close that gap would be to earn a credit card sign-up bonus or by transferring 75,000 Marriott Bonvoy points.
However, if you've tapped out those options, you can earn miles through the Bask Mileage Savings Account. How much you'd need to save depends on how soon you want to book the award. Here's approximately how much you'd need to save to earn 25,000 AAdvantage® miles:
- $10,000 for 12 months
- $20,000 for 6 months
- $30,000 for 4 months
- $40,000 for 3 months
Whether you're saving for a particular award or just trying to avoid mileage expiration, the Bask Mileage Savings Account is an excellent option for earning AAdvantage® miles. For those seeking to earn cash interest instead, you can earn an excellent rate by saving through the Bask Interest Savings Account — which recently increased rates to 5.1% APY.
Terms & Disclosures:
Bask Bank is a division of Texas Capital Bank. Member FDIC. The sum of your total deposits with (i) Bask Bank and (ii) Texas Capital Bank are insured up to $250,000. Additional coverage may be available depending on how your assets are held.
The annual percentage yield is effective as of Monday, June 12, 2023. Rate is variable and subject to change after account opening. There are no monthly account fees. If an account remains unfunded for fifteen (15) days, we reserve the right to close that account. Read Terms and Disclosures here.
AAdvantage® bonus miles are awarded within 10 business days upon meeting offer qualifications and may take 6 to 8 weeks to post to your AAdvantage® account. The value of this bonus offer will be reported to the IRS, and the recipient is responsible for any federal, state or local taxes on this offer.
American Airlines reserves the right to change the AAdvantage® program and its terms and conditions at any time without notice and to end the AAdvantage® program with six months notice. Any such changes may affect your ability to use the awards or mileage credits that you have accumulated. Unless specified, AAdvantage® miles earned through this promotion/offer do not count toward elite-status qualification or AAdvantage® Million Miler™ status. American Airlines is not responsible for products or services offered by other participating companies. For complete details about the AAdvantage® program, visit aa.com/aadvantage.
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