In 2020 we saw the introduction of Bask Bank, which I now use as my primary savings account. Rather than earning interest, you can earn valuable American Airlines AAdvantage® miles at an attractive rate.
I’ve now had a Bask Bank account for over a year, so I wanted to reflect on the value I’ve received from this.
In this post:
How many miles I’ve earned with Bask Bank
Note: Bask Mileage earnings rates have increased to 2.5 miles per dollar saved annually as of May 2023, so your mileage accrual numbers will be slightly different than mine below:
I opened a Bask Mileage Savings Account a bit over a year ago, so I wanted to share a bit more about the miles I’ve earned. If you ask me, the ongoing value of a Bask Mileage Savings Account has improved even more since launch:
- Interest rates are even lower than they were when Bask Bank launched, yet the awards structure has remained the same
- At the start of the pandemic many people weren’t thinking about travel, while now a lot more people feel comfortable starting to plan international travel, so earning miles is more on their mind
The timing of Bask Bank launching worked out well for me, as I was in the process of buying a home, so needed to keep some additional cash on hand beyond my usual emergency fund.
I put $100,000 into my Bask Mileage Savings Account, and at the time there was a bonus offering 40,000 bonus AAdvantage® miles if I kept the account funded with that amount for at least 12 months (this bonus is no longer available). I’ve earned that full award because all that money has stayed in the account for the past year (we still haven’t closed on our new place, so I’m no further along than I was a year ago in that regard, but that’s a whole different story).
So over the past year, I’ve earned 140,000 AAdvantage® miles from holding onto that balance — that includes one mile per dollar kept in the account annually, plus the initial bonus of 40,000 miles.
Factoring in the new account bonus, I’ve essentially earned 1.4 AAdvantage® miles for each dollar in my account. By my valuation that’s a 2.1% return, and that’s not even factoring in the advantageous way that these awards are taxed, which increases the rate of return even further.
Note that the introductory bonus that’s currently available offers 1,000 bonus AAdvantage® miles when you deposit $5,000 and maintain that as a minimum daily account balance for at least 90 consecutive days within 120 days of opening the account.
AAdvantage® bonus miles are awarded within 10 business days upon meeting offer qualifications and may take 6-8 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.
If you ask me, in the current interest rate environment you won’t find a better return on an account that allows you to keep your cash fluid. That’s especially true for those of us who know how to get maximum value out of our miles.
Basics of earning miles with Bask Bank
With Bask Bank, you can earn miles for saving rather than spending, all with a no-fee account. Specifically, you earn 2.0 AAdvantage® miles for every dollar deposited annually. That means if you put $10,000 in your Bask Mileage Savings Account for a year, you’ll earn 20,000 miles.
With interest rates as low as they are, I’ve found this to be a phenomenal value. Personally I value AAdvantage® miles at 1.5 cents each, so by my valuation that’s the equivalent of a 3.0% Annual Percentage Yield (APY).
But there’s a further benefit — when you earn cash with a savings account, you pay taxes on the amount of cash you’re earning in interest. Meanwhile Bask Bank issues 1099s for the AAdvantage® miles you earn, though it’s at the conservative valuation of 0.42 cents each, so that’s the equivalent of a 0.42% APY.
The benefit of that lower valuation of miles varies based on your tax bracket. The highest marginal 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 in lieu of 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.
It’s probably also worth mentioning that while Bask Bank is fairly new, its parent company, Texas Capital Bank, has been around for a long time. For years I used BankDirect as one of my primary savings accounts, but the value proposition and user experience has been improved significantly with the introduction of Bask Bank.
How I’m redeeming the miles I’ve earned with Bask Bank
Earning miles is one thing, but what did I actually do with the 140,000 AAdvantage® miles I’ve earned so far? There are lots of great uses of AAdvantage® miles, both for travel on American Airlines and oneworld® partners. I recently decided to book a trip to Oman with my dad (it’s a gorgeous country, and there are some resorts there I’ve been looking forward to checking out).
I found award availability for travel on Qatar Airways through Doha, and business class award tickets cost just 70,000 AAdvantage® miles per person for our flights, plus $15.70 in taxes & fees.
That’s an incredible deal.
As a point of comparison, if paying cash, those tickets would have cost nearly $6,000 per person (admittedly there are much better fares available in business class, but this is simply to illustrate the outsized value that’s possible when strategically redeeming miles).
I’d say two business class tickets to Oman are some pretty solid awards to earn for keeping $100,000 in an account, compared to other options that allow you to keep money easily accessible.
To give another recent example of a great use of AAdvantage® miles, over the summer I took my mom to Greece, and we had such a memorable time. I redeemed just 57,500 AAdvantage® miles for a ticket from Tampa to Athens on American and British Airways, which was a great value.
Even if you deposit a smaller amount of cash in a Bask Mileage Savings Account, there are still plenty of worthwhile redemption opportunities. For example, award tickets start at just 6,000 miles one-way, and there are often international award tickets to the Caribbean available for just 10,000 miles one-way.
Furthermore, there are lots of ways to earn AAdvantage® miles, so a Bask Mileage Savings Account could be part of a larger strategy for earning miles.
Bottom line
With a Bask Mileage Savings Account, you can earn 2.0 AAdvantage® miles for every dollar deposited annually. With the current interest rate environment, I consider this to be a good yield. I value AAdvantage® miles at 1.5 cents each, and then there’s the further benefit of how the miles are taxed.
I’ve now had a Bask Mileage Savings Account for about a year, and I earned the bonus of 40,000 miles, plus 100,000 miles just for having that balance for a year. I was able to redeem those miles for two Qatar Airways business class tickets to the Middle East, which is a bit more fun and valuable of an award than I would have otherwise earned for keeping this money liquid, if you ask me.
I don’t think there’s a better option out there for those who are looking to keep some amount of cash in a savings account.
Ignoring tax implications, with the new offer, you get 5000 miles for $25,000 deposit plus 2-miles per $. Correct? That comes out to 55k miles after 1 year? You can also choose to earn 3.85% APY to get $962. So you're essentially 'paying' $0.0175 per AA miles; close to par but I prefer cash at those rates.
very helpful to know it is taxed as if it was 0.42 cpm. Now it even qualifies as Loyalty Points! (confirmed via AAdvantage Twitter). I wonder if they would raise the earning rates given the recent increase of interest.
Any word yet on whether Bask miles will count towards status next year?
What about with the new American Airlines points value system? Will I still be able to earn new american points with my bask bank account?
Be says: "If you ask me, in the current interest rate environment you won’t find a better return on an account that allows you to keep your cash fluid."
I bonds, actually. Not as a fun, and slightly less liquid, but better. If you and Ford are maxed on those each year, then I agree that bask is pretty good.
"we still haven’t closed on our new place"
Can you still walk away? Looks like rising sea levels will swallow coastal cities like Miami...
Maybe I missed it but I don't see any mention of the impact based on the changes to the AAdvantage program. Everything I have read to this point says no one knows yet as American Airlines has yet to say...do you know what if any impact this will have moving forward for Bask Bank?
I emailed Bask Bank directly and they did in fact confirm that miles earned through Bask Bank do not earn AA loyalty points and do not count towards AA elite status.
Bask would have no idea what AA does internally. So, contacting Bask was probably not useful. I am waiting for guidance from AA. Alternatively, Bask pays out miles early in the month, so by mid January I should see my answer.
Further, the statement from Bask that you will not earn "loyalty points" reemphasizes their lack of understanding. It is not miles after 12/31/21, it is loyalty points. I suspect Bask has no idea.
Could you please tell us more about the tax treatment in the US for interest paid in miles. Thanks
Bask will issue you a 1099INT (if required) which will state the imputed/implied amount of interest your account "earned" during the reporting year. Using the imputed/implied valuation that Bask uses ($0.0042/mile), 10,000 miles would result in a 1099INT statement of $42.00 (the product of 10,000 * $0.0042)
Worth mentioning if you had invested in an S&P 500 ETF you would now have ~$130k over that period.
With inflation at 5-6%, you're still losing money keeping that amount in cash even if you are earning miles.
Hi Omar,
From an investment perspective you're right, but an overall investment strategy also can include funds in a savings or similar account for liquidity. Also, Lucky stated the money was earmarked for a purchase. Those types of funds are often held in a more stable savings account, or similar, as markets can sometimes also go down. If the horizon for use is within one year having it out of the market makes sense.
This year was particularly good for ETF. Perhaps, Lucky is just keeping some moderate % in cash reserves to buy in.
That 100k was risk free with fdic, s&p is not
Absolutely correct. Anyone that compares investing in an ETF to putting money in a savings account is outright delusional. You could also be a millionaire if you would perfectly timed SHIB coin. If you timed it poorly your account would be in a horrific state with a massive loss over 50%.
Nice work.
PS The Bask Bank calculation to earn AA points is as follows:
Bask Bank balance divided by 365 days X # of days in a given month (i.e.30).
So with a $150,000 bank balance div./ 365 days =411 x 30 days =12,328 points added to your AA account each month.
@Lucky. Just 2 weeks ago we went to Muscat on Qatar (BNA-ORD-DOH-MCT) using our miles earned from our respective Bask accounts! Unbelievable experience in QSuites - fantastic hard product, amazing customer service.
Since our ticket's last leg (DOH-MCT) (and yours too) was coded as First class, we had access to the al Sawfa lounge. And the funny thing was, just as we sat down there waiting to spend our 7 hour layover there, I...
@Lucky. Just 2 weeks ago we went to Muscat on Qatar (BNA-ORD-DOH-MCT) using our miles earned from our respective Bask accounts! Unbelievable experience in QSuites - fantastic hard product, amazing customer service.
Since our ticket's last leg (DOH-MCT) (and yours too) was coded as First class, we had access to the al Sawfa lounge. And the funny thing was, just as we sat down there waiting to spend our 7 hour layover there, I told my wife that Lucky wrote about it how amazing it was. So I accessed your review, we were reading it and then we got to the part where you described the sleeping rooms! So I immediately asked an attendant about it, who then at once escorted us there, and we spent a most relaxing 7 hours in the ultra-quiet room with private bathroom. So thanks Lucky, without reading your review, we would have missed out on that experience :-)
Using my 140K, LAX to Kuwait to start 5 week Persian Gulf 5 country trip in February. Last leg Doha/Kuwait is first class. Hope to have access to the Al Safwa Lounge. Unfortunately only a 2 hour layover. Thanks Daniel B. for reminder.
You will love it! I have never seen anything like that before. I didn’t even know we can have access, we headed over the business class lounge with our First Class DOH-MCT boarding pass (the ticket was for Business Class), and they told us that we are eligible to go to the al Safwa.
Even if you just walk around and eat at the fantastic and FREE in-lounge a la carte restaurant, it would be worth it!
Ben,
Great story re Bask Bank AA rewards. I too have a Bask Bank account have earned 149,000 AA miles over time.
I now have approx. $185k in my bask Bank account so the return on AA miles will be going up each month.
CONGRATULATIONS!
on both things, Miles earned and money well invested as well as taking the "Seniors" away and Dad to the wonderful Oman!
Hope he enjoyed that trip and the sites and the well hidden treasures on this planet from Mass Tourism?
My 1 and ONLY Q i would have, how on earth does young Benjamin Schlappig have 100k on the side to just not need for an entire year? (i know, pretty personal, but i am Bavarian, that's how we are :-) Ciao)
Any update on whether or not Bask AA miles count toward the new AA status program?
Ben, what's taking so long on buying your house.
Did you ever get any confirmation as to whether miles earned through Bask Bank will earn Loyalty Points under the new elite qualification system?
I'm also eagerly interested in hearing more about this