Bask Bank Review: Earn Miles For Saving, Not Spending

Filed Under: American AAdvantage, Great Deals
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Unlimited AA Miles
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up to $250k
Annual Fee: No annual or monthly maintenance fees

We recently saw the introduction of Bask Bank, which is essentially a new and improved version of BankDirect.

I’ve been a customer of BankDirect for about a decade, and have found them to be very reliable, even if their technology was a bit lacking. Bask Bank, however, has modern technology and tools, and is backed by an institution that’s been around for years. Both BankDirect and Bask Bank are divisions of Texas Capital Bank, N.A., a member of FDIC, so the sum of your total deposits are insured up to $250,000.

In this post, I wanted to take an in-depth look at Bask Bank, which enables you to open a savings account and earn American Airlines AAdvantage® miles instead of interest. While it’s understandable that a lot of people don’t want to travel right now, this is a great option for accruing awards that you can redeem once you’re ready to travel again.

The importance of saving has never rang true more than right now, and for those who are in a position to do so, opening a Bask Savings Account makes a lot of sense. Bask Bank is a digital bank that lets you save without leaving your home, and gives you opportunities to earn AAdvantage® miles.

How does it work? Is it worth it? And what else do you need to know?

How Do Savings Accounts Work?

Let me start with the basics. If you’re already familiar with the concept of savings accounts, then, by all means, skip this section.

A savings account essentially allows you to keep your money in a safe place in exchange for some interest. This doesn’t come with the risk associated with the stock market, and it gets you a better return than your standard checking account.

Generally speaking, the money in savings accounts is fluid, meaning you can access it at any time. The catch is that the interest rates can vary significantly, both between banks and depending on bigger economic factors, like general interest rates.

Personally, I think a savings account is a key part of a smart financial strategy. While I like to invest some money in stocks and in a retirement portfolio, I try to keep as much of my “liquid” cash in a savings account rather than a checking account.

I only keep as much in my checking account as I absolutely need, and I try to earn interest on everything else with my savings account. If an unexpected expense comes up, I can always move money around.

A savings account is very different than a credit card, by the way — there’s no hard credit pull required, and the process of opening an account is quite easy. Then there’s the obvious distinction of a credit card requiring you to spend money, while a Bask Savings Account awards you for saving money.

What Makes Bask Bank Unique?

Now that I’ve explained savings accounts, what makes Bask Bank unique given the countless savings account options out there?

Earn Miles Rather Than Cash Back

Bask Bank allows you to earn American Airlines AAdvantage® miles in a straightforward way with your savings account, in lieu of earning cash interest.

Those of us who are into miles and points probably already earn miles for the money we spend, so it’s nice to also earn miles for the money we save.

I know at this point a lot of people might not be ready to plan travel yet, but that works quite well with what’s being offered here — you will earn lots of miles over the next year that you can use for future adventures.

Bask Bank Has A Great App

Not only does saving money with Bask Bank potentially earn you great awards, but what also impresses me about them is their technology and how easy they make it to manage your money.

Technology has clearly been a focus for Bask Bank, and that shows with their user experience. From signing up for an account to managing your money, it’s all quite seamless with Bask Bank. Now more than ever before, being able to bank from home is important.

There Are No Fees With Bask Bank

There are no fees with Bask Savings Accounts, so you don’t have to pay anything to keep the account open, regardless of your balance. This is a great improvement over BankDirect, which used to have fees associated with keeping accounts open.

Earning AAdvantage® Miles With Bask Bank

There are several opportunities to earn AAdvantage® miles with Bask Bank, and the opportunities are particularly lucrative when you open your account, and when you maintain a certain balance for the first year.

Below I’ll share four opportunities to earn AAdvantage® miles with the current Bask Bank offer, including the standard mileage earning rate, the opening bonus, the feedback bonus, and the balance bonus.

Earn One Mile Annually Per Dollar Saved

With Bask Bank, you earn one AAdvantage® mile for every dollar deposited annually. That means if you put $10,000 in your Bask Savings Account for a year, you’ll earn 10,000 AAdvantage® miles.

We’ll talk more about that value proposition in a bit, but that has the potential to be well worth it.

Earn A 5,000-Mile Opening Bonus

Bask Bank is offering an account opening bonus — if you deposit $5,000 with Bask Bank, you’ll earn 5,000 bonus AAdvantage® miles.

This is valid through April 30, 2020, and you must maintain the $5,000 balance for at least 30 consecutive days within 60 days of opening the account.

Earn A 1,000-Mile Feedback Bonus

If you open a Bask Savings Account between August 1, 2019 and April 30, 2020, you can earn 1,000 bonus AAdvantage® miles by completing the Bask Bank online feedback survey by June 30, 2020.

Earn Up To 40,000 Miles Balance Bonus

Not only can you earn miles for your ongoing balance, but Bask Bank even has a balance bonus for new members:

  • Maintain a $25,000 balance for 12 months and earn 10,000 bonus AAdvantage® miles
  • Maintain a $50,000 balance for 12 months and earn 20,000 bonus AAdvantage® miles
  • Maintain a $100,000 balance for 12 months and earn 40,000 bonus AAdvantage® miles

To qualify for any of these bonuses, be aware that:

  • This offer is valid through April 30, 2020
  • Account must be funded within 60 days of account opening
  • You need to maintain the above balances for 12 consecutive months within 14 months of opening an account
  • You’ll receive half of the mileage bonus after maintaining the necessary balance for six months, and the other half of the mileage bonus after maintaining the necessary balance for 12 months
  • All Bonus AAdvantage® miles are awarded within 10 days of meeting offer qualifications and may take six to eight weeks to post to your AAdvantage® account.

How Many Miles Can You Earn With Bask Bank?

There are several opportunities here, so it can almost be challenging to keep track of how many miles you can earn.

Assuming you earn the opening bonus, feedback bonus, and balance bonus, in addition to the standard miles, how many miles could you earn within your first 12 months?

  • If you deposited $5,000 you could earn 11,000 AAdvantage® miles
  • If you deposited $25,000 you could earn 41,000 AAdvantage® miles
  • If you deposited $50,000 you could earn 76,000 AAdvantage® miles
  • If you deposited $100,000 you could earn 146,000 AAdvantage® miles

As you can see, within the first year and with the above amounts you could earn anywhere from 1.46 to 2.2 AAdvantage® miles per dollar saved.

Ready to earn miles without leaving home?

Set up your Bask Savings Account here

Do You Have To Pay Taxes On Miles Earned With Bask Bank?

With a savings account, you typically have to pay taxes on the awards you earn. For most savings accounts, it’s cash you’re earning, so the math is pretty easy to do. But how does it work with AAdvantage® miles?

Bask Bank will issue 1099s for the value of AAdvantage® miles, but they’re valuing AAdvantage® miles at the very conservative amount of .42 cents each, so that’s the equivalent of a 0.42% Annual Percentage Yield (APY). Note that now BankDirect also issues 1099s for the value of miles earned.

How much that will cost you varies based on your tax bracket. The highest tax bracket is 37%, so at absolute most you’d be paying taxes in the amount of 37% of that 0.42% APY, which is ~0.15 cents per mile, which is about a tenth of what I’d value them.

Not only can earning AAdvantage® miles as interest be lucrative to begin with, but the fact that you can get outsized value way above the taxable value of these miles potentially makes this even better.

Why Opening A Bask Savings Account Is Worth It

Personally I value AAdvantage® miles at ~1.5 cents each, but that’s a conservative valuation. Based on that, let’s do some math about the value proposition of Bask Bank.

If you were to put $5,000 in a Bask Savings Account for a year and complete all the requirements:

  • You’d earn 11,000 AAdvantage® miles, which I value at ~$165
  • Even in the highest tax bracket you’d pay at most ~$17 in taxes
  • You’re still earning at least ~$148 worth of miles
  • That’s like a return in the first year of nearly 3% APY in value

Let’s go to the other end of the spectrum here. If you were to put $100,000 in a Bask Savings Account for a year and complete all the requirements:

  • You’d earn 146,000 AAdvantage® miles, which I value at ~$2,190
  • Even in the highest tax bracket you’d pay at most ~$227 in taxes
  • You’re still earning at least ~$1,963 worth of miles
  • That’s like a return in the first year of nearly 2% APY in value

Those returns are exceptional for a savings account, especially when you consider that these returns assume you’re paying taxes based on the highest bracket. Furthermore, with interest rates as volatile as they are right now, this is an especially lucrative return.

What About After The First Year?

When you factor in all the bonuses for a new account, the math is obvious, but what about after that?

  • You’re earning one AAdvantage® mile for every dollar deposited annually
  • Based on my valuation of 1.5 cents per mile, that’s a ~1.5% APY return
  • For tax purposes, the miles are being valued at ~0.42 cents, so in the highest tax bracket you’d pay at most ~0.15 cents per mile
  • That’s an after-tax return of at least ~1.35% APY, give or take

Of course, you’ll want to consider:

  • How much you value American Airlines AAdvantage® miles
  • How much interest you’d otherwise earn, which is based on all kinds of economic factors
  • What your tax bracket is

For most people who are good at redeeming AAdvantage® miles, I think the numbers work out favorably even after the first year, especially with the current interest rate environment.

If it’s a factor, miles also never expire when you have a Bask Savings account, since you’ll be earning miles every month. Otherwise AAdvantage® miles expire after 18 months of inactivity.

Is This Really The Time To Earn AAdvantage® Miles?

A lot of people may be wondering “is this really the time to be earning AAdvantage® miles?” That’s a valid question. We all should be at home right now rather than traveling, though I think we’re all dreaming of our future adventures.

I’d argue that the current situation is all the more reason to get a Bask Savings Account right now. You‘ll continue to earn miles today (with extra bonuses six months and twelve months from now) so you can be more prepared for travel when the time is right.

This is especially valuable when you account for current interest rates, and also consider that it’s a good time to be saving money if you’re able to.

There are all kinds of amazing uses of AAdvantage® miles, whether you want to plan a last minute getaway using an American Airlines Web Special award, or whether you want to redeem on an American Airlines partner airline in first or business class.

The reason business and first-class award redemptions are such a good deal is because these tickets can be disproportionately expensive when paying cash but are often reasonably priced in miles.

Bottom Line

I’m thrilled to see Bask Bank’s new savings account, allowing people to earn AAdvantage® miles rather than cash for saving money. The return rate is excellent in the first year, and even in subsequent years, unless interest rates change significantly.

As I mentioned above, I’ve been a BankDirect customer for years, and Bask Bank provides an enhanced mileage earning opportunity where every dollar you save earns you one AAdvantage® mile annually with no limits and no fees. If you have an existing account with BankDirect, moving those funds into a Bask Savings Account will likely earn you more miles at a lower cost, while keeping your business with a reputable institution.

While we’re not really able to travel right now, you’re earning awards that you can redeem towards travel in the coming years, and I think that’s a great opportunity.

Bask Bank and BankDirect are divisions of Texas Capital Bank, N.A. Member FDIC. The sum of your total deposits with (i) Bask Bank; (ii) BankDirect; and (iii) Texas Capital Bank, N.A. are insured up to $250,000. Additional coverage may be available depending on how your assets are held.
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Comments
  1. Thank you for not comparing the savings rates for this online bank with brick and mortar banks. Bask’s own advertising and the other that parrot it (VFTW) is more than a little misleading.

  2. Thank you for this information. I received the marketing materials on this promotion back in the fall. I was very interested knowing that $100K would generate at least 100K miles per year. The only thing I couldn’t ascertain was the 1099 rates for the miles. The marketing materials didn’t list an amount, only some language regarding a “proper value that could fluctuate” and that gave me pause, but if this is true they are valuing this at .42 cents then I feel this is a good value.

  3. Any risk of claw back (or some kind of retribution from AA) if you close the account shortly after receiving the bonus miles?

    My liquidity isn’t as strong as it was when I opened this account in February, and parking money there to earn AA miles is less of a priority (especially given my current high Advantage mile balance).

  4. Interesting. I wonder whether this is worth it. Consider the case of a couple with $1,000,000. They could put all of this in Bask Bank and still have it all be FDIC insured ($500,000 on a joint account and two $250,000 single accounts). They’d earn 1,138,000 points at 12 months. According to Bankrate, they could instead put their $1 million in money market accounts earning 1.75%, which would earn them $17,500 assuming rates don’t change. But they would have to pay taxes on all of that, whereas they’d be taxed on only $4,800 for the points.

    So, after accounting for ~30% taxes, it works out to about $10,800 in opportunity cost for 1,138,000 points, or 0.95 cents per point. ($17500*0.7 – $4800*.3). If interests rates go down, it’s an even better deal. And if the stock market is currently bottomed out and you invested that $1 million in equities instead, it’s potentially a much worse deal.

    Not to mention that you’d have to have $1,000,000 burning a hole in your pocket.

  5. I’m getting 1.67% right now on about 3M of cash at CIT Bank, but throwing $100k at this might make sense. However, I’m also sitting on about 600,000 unused AA miles which I have no idea how to use. Once people are flying again, J/F flights will be super cheap so there’s little incentive to use miles and I want to maintain executive platinum status. So I’m thinking there’s about a 4-5 months window in 2020 where I don’t care about status (since I’m extended to 2022), where our family can go burn some miles.

  6. Any idea @Lucky if these will count for lifetime status like the credit card earning during the reopened period that will happen?

  7. @ RabbaMD — Unfortunately it wouldn’t, that’s specific to their co-brand credit card agreement and doesn’t include Bask Bank. Sorry!

  8. @ snic — Excellent math you’re doing there, that’s exactly how I view it. I’d acquire AAdvantage miles for under one cent each all day long, and with interest likely to get lower rather than higher in the near future (at least based on how I personally see it), the deal gets even better.

    Or you can always split the difference here, and open an account for you and your spouse and fund them each with at least $100K. Given the opening bonuses it’s an absolute no brainer to open an account and keep it for a year. I think the value is there long term, but that should make the decision even more obvious.

  9. @ Hal — In terms of opportunity cost, putting at least $100K in a Bask Bank account seems to make sense, even with your current AAdvantage balance. I totally get being on the status hamster wheel, though you can always use miles for family that isn’t as status-focused, or this year while your status is renewed anyway.

  10. My etrade savings account rate went from 1.75% to 0.2% this month, so I’ll be taking another look at this. Back in the last recession when savings rates were near zero, I parked some money at their sister bank BankDirect which had a paper and fax based system in 2010! So I hope this Bask Bank has better technology.

  11. @ Rico — I just opened my account a few days ago, and I thought the technology was excellent. In fairness, I’m not a tech guy, but I found their website and app both exceptionally easy to use.

  12. I put $100k in this when it first started, but the current situation has me considering pulling some of that out. I’m sitting on almost 800k of AA miles so I don’t value the marginal miles as highly anymore with no way to use them in the short term. Especially since I’ll also be generating more from credit card spend than normal by shifting some spend to work toward million miler. If the stock market drops again, I’ll probably liquidate some of my Bask balance to buy index funds.

  13. @Hal

    Unless you are worth billions and spend a few million every month, I don’t think leaving 3M in cash earning 1.67% is a good idea. (Maybe in this current situation if you really know what you are doing)
    For you to spend the time to consider 100k in miles, (or banking with CIT) means you are very unlikely to be worth billions.

    Do yourself a favor, go find a financial adviser.

  14. @ Lucky. My husband currently has a BankDirect account, and we share a household. Do you know what the household rules are for BankDirect + Bask Bank accounts? Haven’t been able to find it on their site. I know BankDirect used to only allow one checking account per household. Thanks!

  15. @ Eric — That’s a great question. I just read through the terms and don’t see any restrictions on how many accounts can be had per household, so I believe each of you should be able to open a Bask account and receive the bonus.

  16. The price for AA miles hinges upon “good faith ” estimation by Independent Bank Group , which is the Bask owner
    The current price will definitely downgrade as the .42 is current on the Jan 20, 2020 disclosures in the T&C. for this product.
    No compound component for these accounts.

    You really have to love AA miles to subject good money to such dismal terms.
    Pay attention to the 7 day account withdrawl notification they can require if they so choose.

  17. Why would you want to close the Bask act?
    Leave a couple of bucks in to generate an AA mile regularly to keep you AA miles from ever expiring.
    No fees. What’s the downside?

  18. I’m so impressed with some of you talking about each spouse opening an account with $100,000. per account. Good for you…I’m envious. Bask is a very interesting concept.

  19. Unfortunately this bank engages in “digital redlining.” If you don’t have a mobile phone with one of the mobile phone providers they recognize, they will not allow you to open an account. I don’t recommend banks that enforce a digital divide.

  20. It took us over a month to get everything correct on our new accounts. They really don’t seem set up to handle a lot of applications, and when something goes wrong it takes a month to get it fixed. But now that it’s set up the miles seem to be posting.

  21. I can’t agree with this analysis because you are only focusing this post on the miles vs interest rate of a traditional savings account.
    1. There are other fixed income investments that earn more than bank interest rates
    2. Related to number 1, most people that have the assets to invest won’t keep more than they need in cash
    3. You forgot about inflation which is around 2%, so even if they consider it worth 0.5% it’s still a loss. For the money that people regularly use it seems easier and most efficient to use a regular bank account.

  22. I have this and I love it. Why not? I am going to keep it for travel savings and money for birthday presents and things I want. It’s a great way to earn AA miles and easy to transfer money into and out of. I think it’ll help my household. I’m also using it to help teach my kids about various ways to earn miles and money for travel and savings, etc.

  23. For the record, my math in the comment above was wrong. This is correct:

    $1,000,000 on deposit for 12 months earns 1,138,000 miles

    One could have earned $17,500 assuming 1.75% interest.

    After reducing that amount by 30% for taxes, that’s an opportunity cost of $12,250.

    In addition, one has to pay taxes on the interest that Bask will report to the IRS on a 1099, which amounts to $.0042 per mile, or $4,780.

    So the total cost is $12,250 + $4,780 = $17,030.

    Which means the cost per mile is 1.5 cents per mile, not 0.95. (Before, I subtracted instead of added – dumb mistake.)

  24. @snic, great analysis.

    I actually like AA, but I value their miles at best $.01. Like Mr Wonderful, I love my money. I would never do THAT to my money.

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