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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 $1 saved annually. And Bask launched the Bask Interest Savings Account that currently pays 5.1% APY. What hasn't changed: I still hold all of my cash savings in Bask — but now in a mixture of mileage- and cash-earning accounts.
We have updated the post below to reflect current rates as of October 2023. However, the post still reflects the decisions made at the time of publishing in late 2020.
In January 2020, Bask Bank launched a new savings account offering the ability to earn American Airlines AAdvantage® miles from your savings. Unlike previous AAdvantage® mile-earning savings accounts, Bask Bank doesn’t charge monthly fees or have balance limits.![?gdpr=$[%FT_GDPR%]&gdpr_consent=$[%FT_GDPR_CONSENT%]&gdpr_pd=$[%FT_GDPR_PD%]&us_privacy=${US_PRIVACY}&cachebuster=[CACHEBUSTER]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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.
Bottom Line
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.
The comments on this page are not provided, reviewed, or otherwise approved by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
What a great article. My miles will expire next Jan and with no business travel I want sure what to do. Now I have an option
I like detailed information about Bask Bank, 1st without awardwalled I would newer know about it, 2nd currently I don’t own any AA miles card but I need only 4000 miles to my goal of two tickets to Europe. I will open an account soon. The blog post is very detailed and informative and really because very low-interest rate offered by banks it makes sense to earn miles if you into the AA miles game and have savings.
So if I read this correctly, I can open a Bask account, deposit $12, and walk away, and my AAdvantage account will be credited with a mile each month? That would ensure that my miles never expire, and I would never have to worry about it again. (Even if they round down when calculating the miles awarded each month, $12 should still trigger a deposit in months that have 31 days, which would suffice to renew my miles more than once every 18 months.) Looks like a cheap enough way to eliminate that concern for good!
Easy way to figure out miles. Put $36,500 into the account on day 1 and let it sit for one year. Each day, you will earn 100 miles. Multiply 100 by the number of days in that month (Jan x 31, Feb x28, Apr x 30) and that will be the mileage deposit five days after the month ends.
Anyone know how easy it is to remove your money and close your account?
Is there any bonus to get referred for this account? Is there a military, government employee or veteran bonuses?
Thanks for the information.
Mario
Good questions! Unfortunately, Bask Bank ended its refer-a-friend promo (https://awardwallet.com/blog/why-earning-airline-miles-beats-2-percent-interest/). And I’m not seeing any bonuses for military or government right now (but thank you for your service!)
I don’t believe in savings accounts, much better return in an index fund in the stock market!
Wow I wish I knew about this earlier! I put my emergency fund in an online savings bank with only 0.5% APY now. Seems a great idea to move them to earn a few more AA miles.
I still think cash is better personally
That’s really a good idea to get new customers. I think I will move to bask bank too … miles are always welcome. 🙂
Are these related to UFB Direct?
They used to have an AA savings account…
It doesn’t seem so. Bask Bank is a branch of Texas Capital Bank, which also has BankDirect as a subsidiary. UFB Direct is part of Axos Bank.
Great idea, but I hope there will someday be an equivalent that gives hotel points. With no business travel in 2020 and retirement in the future, I’m going to miss my free hotel stays. I may have to get a hotel based credit card.
To be honest, a hotel card is probably a good idea anyway – so long as you’d stay at said chain if you didn’t have the card. Otherwise a generic travel card will probably be more valuable.
I got in on the Bask Bank account in the summer too. I had forgotten to add more of my funds there though.
I wonder whether bonus miles will be offered time and again, but the initial bonus is seductive. I use to get miles through my Santander Bank account, but their agreement with the AAdvantage program was terminated. I have already discussed with my husband moving our US savings here (he agreed…).
Bask does currently offer 1,000 miles when you sign up. I think it probably isn’t likely we’ll see bigger bonuses any time soon considering the low interest rates at the moment.
Well, the bank is for you if you prefer miles to capital growth and meaningful dividends offered by other solid investment options out there.
I would certainly imagine the author would recommend and practices diversification, pursuing both miles and capital growth. They would likely make a distinction between savings and investment, with this analysis about cash savings.
How does 1 mile/dollar/year work? Cash interest is compounded daily so I understand the math. I’m not wrapping my head around this though.
And are there any signup bonuses?
Bask Bank offered a sign-up bonus when they first started. But the interest rate environment was much different then. So, unfortunately (but understandably) there’s no sign-up bonus now.
Based on my experience, AA miles are deposited according to this formula: account balance / 365 days x days in the month. So, a $25,000 average balance would earn 2,123 miles in December – which is then deposited in early January (usually the 2nd or the 3rd based on my AAdvantage account activity)
Thanks for this. So essentially average daily balance paid out at the end of the year? I’ll have to look into it. All my high yield accounts have dropped to 0.5% so… blah.
Ah sorry, bad example. Bask awards miles each month based on the average daily balance for that month. The miles are rewarded monthly around the 2nd-3rd of the next month.
Ah, ok. So truly just like a traditional bank but instead of pennies, you’re given miles. I WILL have to look into this. Have their “rates” dropped at all? Is that something to be aware of if they start cutting the miles just like interest rates?
That’s right! No, Bask’s rates have held steady at 1 mile per $1 per year – which is why it’s gotten to be so much better of a deal as interest rates have dropped.
Yeah but… Yes, I’ve been using miles for decades. I don’t know how many free business class flights I’ve had to Europe and Asia. But – since we’ve seen that airlines devalue miles anytime they want, at what point are cash-strapped airlines going to start closing their mileage programs entirely, leaving us with empty accounts? I’m still earning miles on purchases, but I don’t know about moving actual dollars to a new bank just to get miles. Time will tell.
I understand where you come from here. Part of my assumption is certainly that airlines (specifically AA in this case) won’t massively devalue their program. And, I feel they have very little incentive to do so.
The AAdvantage program is massively profitable for AA. In fact, AA struggled to make money from its core business of flying flights even before the pandemic. It was thanks to selling miles to banks and partners that it was able to be so profitable. During the pandemic, mortgaging the AAdvantage program has given the airline a cash flow lifeline. Meanwhile, airlines are reversing devaluations (Qatar) and eliminating fees (AA and many others). So, I believe that airlines are going to look to make their mileage programs better – not worse – in the next few years.
The more I read on this, the better it seems to get. Do you think they will offer a 5000 point sign up bonus once again or was that a one off?
It’s hard say for the long term. I think it’s a pretty safe bet we won’t see it any time soon. Right now they’re being a lot more generous than other banks with the miles earning rate, so I wouldn’t count on a new account bonus.
This is very interesting and worth considering. Thanks for the write up on this!
Interesting business model offering.
Better off buying Apple stock and not worrying about AA revamping the mile program to stay alive!
It seems worth mentioning that there’s a bonus of 1,000 miles after 90 days with $5,000 — not huge, but a little extra boost.
Yep! Every bit helps 🙂