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Editor's Note: This post was originally written in late 2020 when interest rates were at an all-time low. A lot has changed since then. Bask Bank has increased the AAdvantage® mile earnings on the Bask Mileage Savings Account to 2.5 miles per $1 saved annually. And Bask launched the Bask Interest Savings Account that currently pays 5.1% APY. What hasn't changed: I still hold all of my cash savings in Bask — but now in a mixture of mileage- and cash-earning accounts.
We have updated the post below to reflect current rates as of October 2023. However, the post still reflects the decisions made at the time of publishing in late 2020.
In January 2020, Bask Bank launched a new savings account offering the ability to earn American Airlines AAdvantage® miles from your savings. Unlike previous AAdvantage® mile-earning savings accounts, Bask Bank doesn’t charge monthly fees or have balance limits.
When Bask Bank launched in January 2020, I held most of my cash savings in a high-yield savings account. Since I’ve already tapped out my AAdvantage®-earning credit card options, I jumped on the opportunity to start earning miles from my savings. But, I wasn’t ready to go all-in on Bask Bank quite yet.
That’s changed over the past eight months. Incrementally, I have moved all of my cash savings to my Bask Mileage Savings Account. Here are the reasons why I’m choosing to earn AAdvantage® miles rather than cash from my savings.
Lower Comparative Savings Rates
The primary reason that I moved my cash savings to Bask Bank was the drastic change in interest rates in 2020. At the time I opened my Bask Mileage Savings Account, most other banks were offering around 1.6% annual percentage yield (APY) on high-yield savings accounts. Many banks then lowered those rates even further — offering a return of around 0.6% APY.
As rates dropped, Bask Bank continued to offer account holders a steady earning rate of 1 AAdvantage® mile per dollar saved per year. When given the choice between earning 0.6 cents of cash interest or 1 AAdvantage® mile, the choice was clear to me. I chose to earn miles.
Responding to the changing interest rate environment, Bask Bank has since raised the earning rate on this account to a solid 2.5 miles per dollar held in your account each year, increasing the value earned from my savings.
I personally value AAdvantage® miles at 1.6 cents each. Although I’ve gotten much higher value from some redemptions, this is the base value that I use when valuing the miles I’d earn from a promotion, shopping portal, or a mileage run.
So, when cash interest rates plummeted, it became a much better deal to earn AAdvantage® miles instead of cash interest. That was all the motivation needed to transition my cash savings to Bask Bank.
Tax Benefits of Earning Miles Instead of Cash
It’s important to note that the value of this offer will be reported to the IRS and the recipient is responsible for any federal, state, or local taxes on this offer.
However, the choice between earning traditional interest or miles is even easier when you factor in the after-tax return.
Although I value AAdvantage® miles at 1.6 cents each, Bask Bank currently uses a 0.42 cents per mile valuation for tax purposes. Bask Bank doesn’t explain why this is the value used for tax purposes. However, that happens to be the approximate redemption rate AAdvantage® members previously got when cashing out their miles for gift cards through Points.com.
This treatment makes the after-tax value of earning miles even better when you compare it to earning cash interest. Let’s use an example of putting $10,000 into a high-yield savings account, assuming a 25% tax rate and a 4% cash interest savings rate and compare the after-tax return after one year.
Cash savings account:
- Interest: $400
- Tax on income: $100 ($400 x 25% tax rate)
- Net earnings: $300
- Interest: 25,000 AAdvantage® miles
- Tax on income: $26.25 (25,000 miles x 0.0042 value = $105 income x 25% tax rate)
Even if you value AAdvantage® miles at just 1.6 cents each, you’re earning $400 worth of miles and paying $26.25 in taxes. That comes out well ahead of the $300 after-tax earnings on the cash savings account. And the gap only grows as your tax rate and the value you assign to your AAdvantage® miles increases.
Valuable Uses of AAdvantage® Miles
AAdvantage® miles are only as valuable as what you use them for. While travel is on hold for many of us, now’s a great time to save up for award travel in the future.
5,000-mile Economy Web Specials
As we’ve highlighted here on AwardWallet, American Airlines sometimes offers domestic economy award flights for as little as 5,000 miles each.
To earn enough miles for one of these 5,000-mile domestic Web Special awards, you’ll need to save just under $6,000 in a Bask Mileage Savings Account for four months.
That might sound like a lot of savings to get a free flight. However, if you put that same $6,000 in a savings account earning 4% interest, you’d earn just $80 in interest in four months. There aren’t many that you can book for just $80 anymore!
Fly to Hawaii
If you have enough savings and/or a long enough time frame, you can save up for a trip to Hawaii. During “off peak” dates in the fall, winter, and spring, AAdvantage® charges just 20,000 miles each way for MileSAAver awards between the continental U.S. and Hawaii. And, if you start saving with Bask Bank now, you can save up enough miles for an award next fall.
By holding $16,000 in a Bask Mileage Savings Account for twelve months, you’d accumulate 40,000 AAdvantage® miles. That’s enough for a round-trip award to Hawaii during off-peak dates:
These same flights currently cost almost $800 round-trip to buy with cash:
If you chose to put the $16,000 savings in a savings account earning 4% interest for twelve months, you’d earn around $640 of interest. But then you'd have to pay a couple of hundred dollars in taxes.
Just Keeping Your Account Active
Not everyone has $16k in cash savings to save in a Bask Mileage Savings Account to earn enough miles to fly to Hawaii. But that doesn’t mean that Bask Bank can’t be useful for your situation.
Bask Bank doesn’t require a minimum account balance. So, you can save just $12 in a Bask Mileage Savings Account Account to earn around 2.5 AAdvantage® miles each month. That’s not going to be enough to build up toward an award anytime soon. However, it will be enough to keep your AAdvantage® account active.
While other airlines have eliminated mileage expiration, AAdvantage® miles still expire if you don’t earn or redeem miles in an 18-month period. There are plenty of ways to keep your AAdvantage® account active. But, by having a balance in a Bask Mileage Savings Account, you don’t have to worry about your miles expiring.
No Limits on Earning Miles
In addition to having no minimum account-balance requirements, there’s no limit to the number of miles you can earn through a Bask Mileage Savings Account. If you have a substantial amount of cash savings, you can rack up the AAdvantage® miles quickly for even more lucrative redemptions.
For example, if you were able to deposit $72,000 into a Bask Mileage Savings Account, you’d earn around 15,000 AAdvantage® miles per month. After just five months, you’d have around 75,000 miles. That’s enough for an AAdvantage® business class award to Africa.
Perhaps you maximize this by flying Qatar Qsuite from Los Angeles (LAX) all the way to Cape Town (CPT) for under $16 out-of-pocket. That sure beats earning interest!
You can save more to earn these miles even faster. But remember that the Federal Deposit Insurance Corporation (FDIC) only covers the first $250,000 you have saved in each insured bank. So, there’s a slight risk to having more than $250k in a Bask Mileage Savings Account at one time.
Saving with an Established Bank
Just because a Bask Mileage Savings Account earns AAdvantage® miles instead of cash doesn’t mean that it’s any less safe than a traditional savings account. Bask Bank is a division of Texas Capital Bank, N.A. Member FDIC — a Dallas Texas-based bank with around $28.4 billion in assets. That makes it one of the 100 largest FDIC-insured banks in the U.S. by asset size.
So yes, Bask Mileage Savings Account deposits are FDIC insured for up to $250,000 in total deposits between Bask Bank, BankDirect, and Texas Capital Bank, N.A. In the remote chance that Bask Bank was to fail, FDIC would reimburse you for any deposits you lose. And, since Bask Bank deposits mileage earnings into your AAdvantage® account monthly, your “interest” would be safe as well.
When Bask Bank launched in early 2020, I was intrigued by the possibility of earning AAdvantage® miles instead of cash interest. But, I only dipped my toe into the water at the time. When interest rates dropped to record lows, I made the decision to move all of my cash savings into Bask Bank.
Even with cash interest rates increased to over 4%, Bask has retained my business thanks to aggressively increasing interest rates on both its mileage and cash-earning savings accounts.
While you may not feel comfortable moving all of your savings into Bask, it is still worth considering opening a Bask Mileage Savings Account — whether you’re looking for a way to keep your AAdvantage® account active or are building up toward a future award trip.
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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