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
Below I’ll share two easy opportunities to earn AAdvantage® miles with the current Bask Bank offer, including the standard mileage earning rate and the opening 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 1,000-Mile Opening Bonus
Bask Bank is offering an account opening bonus — if you deposit $5,000 with Bask Bank, you’ll earn 1,000 bonus AAdvantage® miles.
You must maintain a $5,000 balance for at least 90 consecutive days within 120 days of account opening to earn this bonus.
Bask Bank Refer-A-Friend
Bask Bank has a new refer-a-friend bonus, whereby existing customers can earn 5,000 bonus AAdvantage miles for referring friends to Bask Bank through September 30, 2020. Here’s how it works:
- You’ll earn 5,000 bonus AAdvantage miles for each friend you refer, up to a total of 25,000 bonus miles (which you would receive if you referred five friends)
- Existing customers can find their referral link in the Bonus Dashboard
- In order for the person referring to earn the bonus miles, the person being referred needs to maintain a minimum daily balance of $10,000 for 90 consecutive days between June 17 and December 31, 2020
- The person being referred gets the same generous new member bonus as usual
- The person referring and person being referred both need to link their AAdvantage accounts in order to receive the bonus, and miles will be awarded the first Wednesday following all qualifications being met
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 6,000 AAdvantage® miles, which I value at ~$102
- Even in the highest tax bracket you’d pay at most ~$10.50 in taxes
- You’re still earning at least ~$91.50 worth of miles
- That’s like a return in the first year of about 1.8% APY in value
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.
I’m thrilled to see Bask Bank’s new savings account, allowing people to earn AAdvantage® miles rather than cash for saving money.
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.