Bask Bank Bonus Offer: Up To 20K Bonus AAdvantage Miles

With interest rates going up, tbh they'd have to be even more competitive for this to be worth it.

If I can get nearly 5% returns on a fidelity account with SPAXX, debit card, and checking, this doesn't really make sense anymore.

Bask was totally worth for emergency fund and whatnot during ZIRP.

Does SPAXX count as long term capital gain if held for a year ? Then it would have a tax advantage over the Bask Bank savings account.

I'm already at the FDIC insurance limit with my bask account. If I withdraw $50K and add it back up in a few days, would i qualify for the bonus?

there's also an opportunity cost of not keeping for full 180 days and getting none of the 20k miles. Or they may reduce the mileage earning rate within 180 days and one can't move the money around to higher rate products. Even with the optimistic valuation of AA miles, it doesn't seem to make sense to me to take the mileage instead of cash.

And... Loyalty Points?

If not, then no.

You can buy treasury bills that yield well over 5% (5.4% for the 6 month, 5.15% for the 1 year). Assuming a blended 5.25% yield over 1 year, you are forgoing $2,625 in cash (pre-tax) to earn 145,000 AA miles in your example. So you are basically buying AA miles at 1.8 cents per point. This is compared to your 1.5 cents valuation.

However there aren't that many opportunities to buy AA miles. One that I think needs more consideration is spending on AA credit cards - since you also get the bonus of loyalty points. Depending on your flying with AA, spend, and how many loyalty points you need, spending on an AA credit card, even in unbonused categories, may be a better idea if you really need AA miles.

Am I the only one without 50K to throw in a savings account? Or even 10K?

Come on this is a horrible offer. Even if you're desperate to turn your hard earned, fungible US cash into non-fungible, easily devalued AA miles..... why wouldn't you just get the Citi AA bank bonus instead? These offers + rates are horrible

SPAXX is a money market fund, all purchases and sales are at $1 NAV. There are no capital gains.

All the dividends are ordinary investment income.

What value does Bask Bank value the miles at for your 1099?

Yes

It is an aggregate of the may 31st balance as well that you can not remove for 6 months. So your holding amount for 6 months is more than the deposit being made so you need to make sure to add in even more money in your deposits if you anticipate having any withdrawals in the 6 month period. You can't go below the aggregate even one time in the 6 month period. Be careful.

Did a rough estimate, if you pay 35% marginal tax, and earn APY around 4.5% elsewhere, you effectively buy miles slightly above 1.3c

I'm sure I'm doing something wrong. Ben says the miles are valued (for tax purposes) at .42 cents/mile, so 20k miles (for one year) you pay taxes on $84.00 And then let's add in the 125k for the 50k you have in there, so an additional $525.00 = $609 (but you now have 145,000 AA miles).
If I just put that in in a high yield (let's say 5% APR), that's like what, $2,500?

All before taxes, mind you.
So the question I guess becomes:
Is the $2500 vs. the $809+ miles worth it?

Given AA's new dynamic pricing for flights (at least domestic F, or USA-Mexico flights in F) that I'm seeing, I'd say not really. What used to cost 60k miles (each way) is now 200,000 miles each way.

I'm not sure I'd value AA miles at 1.3 cents/mile any longer since the last devaluation. (but then again I don't fly economy), and no partner awards for me.

I don't think you understand what opportunity cost means... What you're describing is risk. Opportunity cost is the 4.75% cash interest or whatever else you would rather do with your money.

You're forgetting the fact that for many they get crushed on that $2625. Just federally you get knocked down 32% or higher.

Miles are valued at .42 cents each. 145k miles has a tax value of $609.

Thats a $2000 pretax income difference, it can easily save you $650. If you do it with something specific in mind that is relatively easy to redeem even higher, then it is worth it. Currently I keep it all in Bask Savings at 4.75% as my effective is lower.

Its actually 2500$ (pre-tax) v/s 145,000 miles (pre-tax)
OR
1700$ (after-tax) v/s 145,000 miles -$809 (after tax) [*Tax Rate = 32% for interest]
OR
1700$ (after-tax) v/s $1076 (@1.3CPP)

You would need a redemption of 1.72 CPP to break-even on this.

However, if you only keep this for 6 months, then its
$1250 (pre-tax) v/s 20K(bonus) + 62500(accured) - $404.5
or $850 (after-tax) v/s $668.5 (@1.3 CPP)

You would need 1.52 CPP to break-even. So the question is, which AA or partner flights can give you >1.52 CPP and would you hold this balance to wait for those flights.

Thanks for doing all that math.
At first I was excited but then I began to think about it and something smelled fishy and your calcs confirm what I thought. Even at a 20k bonus for existing customers it turns out to be a buy AA miles at 1.3 to 1.4c/mile. That's pretty slick marketing. I'm not biting though.

I'm not sure if the math is right there...
Keeping it for 6 months and assuming savings opportunity cost is $1250 at 35% tax rate:
$1250 (pre-tax) vs 82500 miles (pre-tax)
= $812.50 (post-tax) vs 82500 miles - (82500 miles * 0.42 c/mile * 35%) (post-tax)
= $812.50 (post-tax) vs 82500 miles - $121.28 tax (post-tax)
= $933.78 vs 82500 miles
So you're effectively buying AA miles at bit over 1.1 CPP. I'm going for it.
Any holes in my logic?

To add to my calculation above... since my savings rate (Robinhood) is 4.65% I think it comes closer to 1 CPP for me. I don't quite have the motivation to buy T-Bills. Another benefit here is that since there is tax difference of $316.22 (from my original calculation) I can harvest that much more in tax loss.

If those miles will be LPs, that would move the needle for me. The way things are going - just look at UA recent devaluation - AA miles will be of little of values very soon.

Does the money need to come from outside Bask Bank, or can I move from the interest-bearing account to the miles-bearing account to get the bonus?

Robinhood has 1% deposit bonus right now ($500 for $50k) for holding the balance for much shorter, so unfortunately, if you only have 50k lying around, the Robhinhood promotion is more worth it.