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Update 5/1/23: The Bask Bank Mileage Savings Account now earns 2.5 Miles per $1 Saved Annually.
If you aren’t earning frequent flyer miles from your savings account, you probably should be. At least you should open an account – which has no annual fees or minimum balances – so that you have the option to earn miles when you want to. It’s a great way of potentially earning a lot of miles, and one of the very few ways to do that without actually spending money.
Bask Bank’s Mileage Savings Account rewards you with frequent flyer miles instead of traditional interest. You earn 2 American Airlines AAdvantage® miles for every $1 saved annually.
I’ve been a customer of Bask and its parent company, Texas Capital Bank, since 2003 as a way to earn miles myself. Based on my math, earning miles for your savings is a better deal than you’ll find from most savings accounts.
Great Rate Of Return On A Savings Account
Bask Bank offers a high rate of return.
- Value compares favorably to most savings accounts. I value AAdvantage® miles at 1.3 cents apiece, earning 2 per dollar saved annually represents to me a 2.6% rate of return. As of this writing, according to the FDIC the average savings account returns 0.35%.
- Return looks even better on an after-tax basis. Bask Bank has reported the miles I’ve earned for tax purposes at a value of 0.42 cents apiece. At a current earning rate of 2 miles per dollar saved annually, this represents a taxable Annual Percentage Yield (APY) of 0.84%.
Assuming that doesn’t change over the next year, earning 40,000 miles (which I value at $520) saving $20,000 would generate a 1099 tax reporting form showing a value of $168.00. If you pay taxes on those miles with a hypothetical combined federal and state income tax rate of 47%, you’re paying $78.96 in taxes. That means netting $441.04.
Compare that to a hypothetical 4.00% APY. That same $20,000 saved would yield $800, $376 in taxes, and a net of $424. In other words, even at my arguably low valuation of miles you’re beating a very high yield interest offer by earning miles. The more you value the miles, the bigger the difference.
- Even better with a bonus for new accountholders. That rate of return doesn’t even factor that as a new accountholder you can earn additional miles, as I’ll describe below.
Choose Miles Or Money
Bask Bank offers both their Mileage Savings Account and Interest Savings Account. Neither one has a monthly or annual fee, and neither one requires a minimum balance to avoid fees (just fund your account within 15 days of opening).
You can move your money to adjust what you’re trying to earn for – whether it’s the miles for your next ticket, or spending money on your next trip. The current offer for a Bask Interest Savings Account is 4.75% APY**. (Update: effective 10/18/2023 the offer is 5.10% APY.)
Why I Choose Miles
When I was single, I felt like I had all the frequent flyer miles in the world. When I got married, I was able to go into multi-player mode earning miles, but I was spending miles much faster too (and my wife has real preferences about how we fly). Now that I’m a dad my miles go much faster.
I also earn miles by making purchases through online shopping portals, for airline shopping, and even by arranging for sitters for my dogs when we travel. The problem is that while every mile matters, there are limits to how many miles I can earn this way. And this is the currency I’ve redeemed for my travels most often.
A Bask Mileage Savings Account is unique because it:
- Lets you earn large amounts of miles
- Offers earning that is repeatable without limit
- Doesn’t require spending money
You can move money in and out as you have the need to earn miles. And you should open the Bask Mileage Savings Account right away to take advantage of 2,000 bonus miles*.
Bask Bank is offering 2,000 AAdvantage® miles for customers that (i) have not previously opened a Bask Savings Account; (ii) meet Bask Bank’s qualifications to open an account; (iii) complete the online account opening process between March 17, 2023 and May 31, 2023; (iv) fund the account within fifteen (15) calendar days following the initial account opening; (v) maintain a minimum daily account balance of $10,000 for ninety (90) consecutive days out of the first one hundred and twenty (120) days following the initial account opening; and (vi) provide Bask Bank with an AAdvantage® account number in the same name as the subject Bask Savings Account.
Opening the account and earning miles extends expiration of miles in your frequent flyer account (or a family member’s American Airlines AAdvantage® mileage account if they open an account with Bask Bank). And a very small deposit will regularly earn a mile and keep expiration at bay indefinitely.
American Airlines Business Class, Boeing 787-9
How You Can Make Use Of Bask Bank Mileage Earning
Now let’s take a look at what you can do with 140,000 miles. The truth is that many people don’t take big redemption trips every year, so for you it may make sense to consider what to do with a larger mileage balance. And a Bask Mileage Savings Account is part of an overall mileage strategy, so consider the miles you already have and those you’ll earn elsewhere.
Still, I think it’s helpful to understand the Bask Bank value proposition to look at how you can use the miles.
- Stretching your miles for travel on American Airlines. Traditionally, airlines made award seats available when they didn’t expect to sell those seats for cash. Even when planes are pretty full, airlines need to satisfy their program members. They’ve got to look at seats that would sell for cash but where the cash price might be low.
American Airlines web specials can offer flights for as little as 7,500 miles each way. 146,000 miles can be redeemed for as many as 19 flights.
- Business class roundtrip to the Maldives. I’ve been to the Maldives half a dozen times. All but one of those times I redeemed my American Airlines AAdvantage® miles to get there. It’s one of my favorite places to vacation because of the distance. By the time I get there I’m immediately ready to collapse into vacation and the time difference means I check my email first thing in the morning and the U.S. business day is over for my entire day ahead. Nobody is trying to reach me.
Overwater Villa in the MaldivesAmerican charges 140,000 miles roundtrip in business class on partner airlines whether you’re flying just to the Mideast, flying to India, or to the Maldives. American’s partners Etihad and Qatar Airways serve Male, the capital of the Maldives, from their Mideast hubs. Cathay Pacific (Hong Kong), SriLankan (Colombo), and China Southern (Colombo) serve the Maldives as well.
- Business class roundtrip to South America. American’s Flight Awards start at 60,000 miles roundtrip for South America – Short Haul travel and 180,000 miles roundtrip for South America – Long Haul. Buenos Aires is a great food city. While you’re there travel to the Mendoza wine region in the country.
American’s partnership with Brazilian carrier Gol makes it easier to connect to places like Iguazu Falls. When I traveled, there I flew American Airlines business class via Miami and connected in São Paulo to Gol.
Iguazu Falls - Business class roundtrip to Tokyo. AAdvantage® charges 120,000 miles roundtrip for a business class partner ticket to Tokyo. Before the pandemic I stayed at the Park Hyatt Tokyo, where much of the film Lost in Translation took place. The goal was to have as much great sushi as possible, and Michelin two star Sushi Masuda was really incredible. I’m planning to return this summer.
With Chef Rei Masuda After An Incredible LunchI was there for sushi, but after having lunch at Jiro Roppongi my wife and I weren’t much inclined to go out to dinner so we ate at the New York Grill at the hotel. I had Akita Nishiki Tenderloin and it was the best piece of meat I’ve had in my life.
You might think about Malaysia (Malaysia Airlines is an American Airlines partner) for the best satay and prawn mee soup and some great beaches, or perhaps Bali.
The most expensive one-way business class award on the American Airlines partner award chart is 80,000 miles. That’s the cost of flying between the U.S. and South Pacific (including Australia). Some of my family moved Down Under when I was five years old. I flew to Australia on American Airlines back when they served Sydney 30 years ago via Honolulu on a DC-10. More recently, preferring to fly in premium cabins, I’ve redeemed my miles to fly American’s partner Qantas and for my next trip again on American.
Sydney Opera House From My Room At The Park Hyatt Sydney
I’m Earning Miles With The Company I’ve Banked With For 20 Years
Texas Capital Bank launched Bask Bank in 2020, offering online savings accounts that earn American Airlines AAdvantage® miles. I love that they’ve continued to improve the value proposition since then, increasing earning from the original 1 mile per dollar saved annually to 1.5 miles per dollar and now 2 miles per dollar saved annually.
I’ve been a customer of Texas Capital Bank since 2003. This is a great way to save money and a great way to earn miles. It’s free, quick and easy to sign up and earning miles for your savings is a better deal than you’ll find from most savings accounts.
My primary use for the account is to put away money for my annual property taxes. That’s one of my biggest expenses each year. It’s something most people don’t earn miles for. Bask Bank helps me set aside the funds and earn miles for it at the same time.
* Mile rewards are subject to change at Bask Bank’s sole discretion.
**Annual percentage yield (APY) as of APRIL 27, 2023. APY is variable and subject to change at any time without notice. Must fund within 15 business days of account opening.
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 per depositor for each account ownership category.
Terrible value. Equivalent to roughly 2.8%/yr. Easy to find better. E.g. SoFi 3.75% on savings accounts. Not to mention MMFs or direct purchase of t-bills for larger denomination accounts.
No, its earning a much greater return in actual money.
And my ALLY savings account is at 3.75% as well. Could get 5% or so if I wanted to go with a CD.
Fido money market is at 4.4%+. I keep all of my short term money there, what used to be checking, savings, etc. It doesn’t make any sense to me to eschew what is now real cash yield for airline funny money.
And good luck with ever finding partner award on Qantas Business class and that too with 80000 miles !
Yes, back in the day, it was possible but have not seen anything in the last 3 years.
@Peeam – I’ve written about extensive availability and I’ve made bookings in fact
@L3 – I think you’re missing the math adjusting for taxes, at least those in high income brackets and especially in high income states do much much better imho
@Gary: Not so. There is a little Bank in Texas called Bask bank offering 4.45%.
From Bankrate:
Bask Bank
Member FDIC
4.7
APY
as of Mar 30
4.45
%
Min. balance for APY
$
0
Are these bones or loyalty miles?
@Gary: And VMFXX. 4.75%.
They are easy to find.
The basic point is that, like those electric utility accounts that pay you AA miles, milage accounts are inferior to the real $ product.
Gary
This is too much – you need to be more objective .
4.35% APR = 4.45c each yr vs 2 AA miles plus tax liability of 0.84c
2 AA miles = 4.45+0.84 =5.4c pre tax
Even at 45% total tax rate 5.45c is 3c after tax = 2 miles
I would not buy AA miles at 1.5c nowadays as they devalued too much
I would rather keep cash – buy any miles on sale like aeroplan or lifemiles and take my chances with paying for a ticket
If I have a stash of AA miles for true deals then I would run from this offer of miles
Did I miss something? Where did the 140k miles come from? Is that hypothetical or are you parking 70k/year in the bank? The offer is for 1000 bonus miles and it looks like it expired last week.
second question: do the miles earned count as loyalty points?
These are bonus miles (redeemable miles) not Loyalty Points (which count towards status)
@L3 I literally cite the 4.45% offer from Bask Bank on an interest savings account, and link to it, in the piece.
Much more fun to play with your money in a savings account in place of a ubiquitous credit account….
Worth adding to your diversification strategy.
You bought 7 million miles a little over a year ago and you’re still trying to get more? I would think you’d want to spend down your balance a bit first before getting more since devaluations are a matter of when, not if.
Comments filled with lack of reading comprehension of course
Everyone’s allowed to make their own decisions with their money. That being said (@peeam), I earned miles via Bask and redeemed them for Qantas J last month. Availability was generous. Math checked out as 5.3 cents/mile on the redemption. Earning two miles per dollar in the savings account puts the value at around a 10.6% return. Not bad at all. I’ll gladly shuffle some cash around from 4% APR online savings accounts to Bask if/when I’m short miles
@305: Bask is irrelevant to the transaction you described. Any AA mile was worth the same on the redemption. You could have got them through the dining program. You would have been better off with a cash return.
@Clemson – I’m doing multiple premium cabin international award trips per year for a family of three, often more than just simple roundtrips, and I give plenty of miles away too… 🙂
Gary- instead of comparing earning miles to a hypothetical 4% interest rate, supposed you compared it to the actual 4.45% interest rate at Bask. Same bank!
I am a long-time user of Bank Direct/Bask, but it is starting to get a lot more iffy. One mile per dollar when internet banks were paying 0.60% was to me a great deal. Now it is two miles per dollar instead of 4.45%. I will give Bask another month or two to adjust its earnings rate, but if it doesn’t, mileage accounts will start to lose me as well as many others. I think you are getting similar thoughts from other commentators. I know you are a very smart guy and can easily see that they are just not keeping up on the mileage accounts. Not sure why and hoping this will change soon for the better.
It’s funny how when people tout high mileage redemption values, they compare the miles cost to the highest possible peak dollar cost of a seat. If you were paying cash, you’d never pay those outlandish fares, and likely find a fare that could be as low as 50% off peak fares, or never buy the seat at all, so they’re really a false analogy. Even if you fight all the hurdles that AA puts in place to actually succeed in making a redemption, this is the second to last place that I would store cash before the cookie jar.
Ummmm, I just opened a no-penalty 11 month CD with Ally giving a whopping 4.75% interest rate return. Remind me again why I should sign up for a Bask account besides you don’t get commissions when I open an Ally account?
@Gary: Just hot an email from Bask.
“No matter what your savings goals are, a Bask CD can help you achieve them faster. Earn 4.85% Annual Percentage Yield (APY)* on a deposit held in a 6-month CD and 4.70% APY on a 12-month CD.”
You are tying up your cash in a miles account — to earn less!
I had never heard of Bask Bank.
This is an interesting concept but risky.
Airlines devalue their miles whenever they feel the need.
I’ll stick with my credit unions because cash is STILL king.
Thank you! The programs can be changed if any moment by AA per their terms and conditions.
This helps 305 with reading comprehension.
Thank you! The programs can be changed if any moment by AA per their terms and conditions.
This helps 305 with reading comprehension.
@DSK – spot on Bask needs to step up the mileage earning rate further, especially as other banks this month are increasing their rates further.
I will say one thing Bask does well is make it easy to add and keep track of beneficiaries online
Fidelity pays 4.33% today on a money market insured account. No strings, no minimum terms, etc.
As the data comes in it is clear that there is no rational reason to use the Bask AA account. Even they have a better cash account.
47% marginal tax rate? That probably corresponds to ~~ $600K annual income (lot of variables obviously). Surely some readers are there but it’s not a “typical” rate to assume.
Plus right now you can buy 6-month treasuries, earn a few tenths better than the savings rate, and they’re exempt from state tax. So that 47% drops ~~ 10% in NY/CA.
Indeed if one is in the 47% marginal blended tax space then munis are going to give a higher effective yield.
Now that you can get easily 5% on savings short term or lock down a similar rate on CDS or treasuries this is a lesser propisiton than it was. I can see having a little in this account if you need to top off some miles and there are some decent sweet spots that oopen up with American. I think the rate now should exceed 2 miles per dollar and move to at least 2.5. I expect to see several CD rates at 6% after the next rate move. They might be limited in scope or promo rates.
@DSK I totally agree with you. When it was under 2% taxable The mile to me was more valuable. I will add something however. If AA let these miles qualify toward the yearly status level, that would be a game changer for me. It would be much stronger as I plan to fly AA alot in the next few years.
@Robertw: A major flaw with the stupid idea of putting your money in a savings account that pays you in shiny trinkets is that the trinket payout rate cannot/is not kept up with market interest rates.
Gary is promoting a really bad idea to his readers and should just recant.
@Peeam Looks like you need to up your game. In recent months Qantas has dumped gigantic amounts of award seats from LAX , SFO and Dallas. How do I know? I booked several at low level 80K business. There are tons of econ seats and some premium econ right now. There are some business seats out there right now. You need to follow the blogs and such. Gary alerted to open space on this blog as well. Dont complain there is no space, when there are sweet spots. Its been a number of years since they did drop inventory like this.
@robertw Yep. IF deposits in Bask earned Loyalty Points, that would be highly significant to me, depending on the level of accrual ( I am currently LT Platinum now so something like one Loyalty Point for every $10 of deposits wouldn’t do it for me, but a 1-for-1 could definitely change my mind). Sadly, deposits currently earn zero Loyalty Points.
@L3 For me, the “shiny trinkets” exceeded the market interest rate for quite awhile, which is why I played in that sandbox. When Bask went from one mile per dollar to two, that still kept me in the sandbox. However, interest rates have gone up substantially since Bask moved from one mile to two, and Bask hasn’t adjusted their earnings ratio. I’m not against the concept, but Bask has a decision to make about whether they want to keep those deposits in mileage earning accounts. I’ll give them another month or two to adjust their earnings ratio, but that’s it.
Just think, all those miles you earned previously could be compounding cash interest on top of the interest earned then if they had been a regular cash deposit. Instead, they’re devaluing and you have to jump through AA hoops and games to maybe, maybe be able to redeem in the future.
@DSK I totally agree. When rates were much lower on the money the ratio for miles was good. I was able to bank a nice block of miles and get really good redemptions. AA like all the programs can be tough with award space on their metal. Clearly the worst now is Delta. That Simply miles deal about a year ago if that offer had been available to me I would have bought a few million miles like Gary and many others did. The offer never shows inside the Simply Miles account I registered once I heard about it. That was a very strong deal and it would have been worth the risk to me on any devaluation.
@ Gary — Bask @4.75% is much better than 2.5 miles at 1.3 cpm, unless you highly value AA miles more highly (>1.3 cpm) or have a very high marginal tax rate (>40%).
That’s a good step to 2.5, thanks for the update
Even at 5 most are down to 3-4 after taxes.
This website sucks by the way. Especially for an IT consultant.
LOL. Line up for the scAAm suckers.
Make them LP’s and I will flood Bask with money.
Vanguard money market fund pays 4.79% today
The bigger question is how much does Gary get paid to “shill” for Bask Bank? As others have mentioned, the 47% tax rate is ridiculous. The top federal marginal rate is 37% and that occurs on taxable income above $540,000 for someone single and $648,000 for those married, filing jointly. Only two states have marginal tax rates above 10% – California and New York- Oregon is at 9.9%. I find it difficult to believe that anyone earning that type of income is concerned about accumulating AA miles.
In other words, the only way Gary’s math works is if you are in the upper echelon of earners and just love flying AA and its partners. For anyone in a lower earning bracket, you’re better off taking the cash.
With a 37% tax rate, the 3.8% Medicare surcharge on investment income and a valuation of 1.3 cents/mile it’s almost exactly a wash.
To me the decision is weighing the cost of holding a non earning asset and potential future devaluations against the tremendous flexibility of being able to book full refundable mileage redemptions and the ability to get way more than 1% value on premium class redemptions.
Should have said way more than 1.3 cents per mile
Should have said way more than 1.3 cents per mile
As others have said here the miles cinterest rate is still uncompetitive. A major reason not to use it is that the supplier is slow to adjust it, slower than open-market interest rates. That is in addition to AA miles being a depreciating currency going forward. Bask’s cash savings account is a better deal.