Link: Apply now to open a Bask Bank savings account
In this post I wanted to take a close look at Bask Bank, which is my go-to bank for my savings accounts. Bask Bank enables you to open an account and earn American Airlines AAdvantage miles or cash interest for your savings, depending on your preference.
For some background, Bask Bank was introduced in 2020. In reality it’s a new and improved version of BankDirect, which I was a customer of for around a decade prior to the start of Bask Bank. Both BankDirect and Bask Bank are divisions of Texas Capital Bank, N.A., Member FDIC, so the sum of your total deposits is insured up to $250,000.
So let’s take a closer look — how does Bask Bank work, is it worth it, and what else do you need to know?
In this post:
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 as possible 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 savings account rewards 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?
Option to earn miles rather than cash back
Bask Bank gives you the option to earn American AAdvntage miles in a straightforward way with your savings account, in lieu of earning cash interest. However, Bask Bank also has an attractive savings account option offering cash interest, as I’ll talk more about below.
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.
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 Bask Bank is the company’s technology, and how easy it is to manage your money.
Technology has clearly been a focus for Bask Bank, and that shows with the user experience. From signing up for an account to managing your money, it’s all quite seamless with Bask Bank, in my experience.
There are no fees or minimums with Bask Bank
There are no fees or minimums with Bask Bank savings accounts, so you don’t have to pay anything to keep the account open, regardless of your balance. Furthermore, there’s not some high minimum deposit amount required in order to earn rewards, as you’ll find with some other savings account options.
Bask Bank rewards you with cash or miles
Bask Bank has two most popular options for saving money. You can open one of the following accounts:
- A Bask Mileage Savings Account, where you earn miles for your savings
- A Bask Interest Savings Account, where you earn cash interest for your savings
I appreciate the flexibility that this offers, and over time you can even switch your earnings preference by transferring money around, while keeping it with the same bank.
It’s important to keep in mind that the rewards for the savings accounts can change over time based on interest rates. For example, we’ve seen rewards improve considerably over time, as interest rates have gotten higher. The rewards are never locked in, but can change over time, and I’ve found that Bask Bank is consistently pretty fair when it comes to its updates.
Bask Mileage Savings Account option
If you want to earn miles, Bask Bank is currently offering 2.5x AAdvantage miles for every dollar deposited annually. That means if you put $10,000 in your account for a year, you’ll earn 25,000 AAdvantage miles. Miles are rewarded monthly, meaning you earn ~0.208 AAdvantage miles monthly. That rate can also change over time — for example, it was just recently increased from 2x AAdvantage miles to 2.5x AAdvantage miles.
There are many great uses of American AAdvantage miles, especially for travel on partner airlines in first and business class. Personally I value AAdvantage miles at 1.5 cents each, to give you a sense of how much those miles are worth. Note that AAdvantage miles earned through Bask Bank don’t count as Loyalty Points toward AAdvantage status, unfortunately.
Bask Interest Savings Account option
If you want to earn cash interest, Bask Bank is currently offering a 4.75% Annual Percentage Yield (APY). That means if you put $10,000 in your account for a year, you’ll earn $475 in interest. That interest rate can change over time — we’ve seen Bask Bank increase the APY several times in recent months, though if interest rates drop, then the APY could also decrease.
Paying taxes on your Bask Bank savings
Rewards earned through savings accounts are taxed, as you’ll be issued a 1099 for the rewards you earn. However, not all rewards are taxed in the same way.
If you open a Bask Interest Savings Account and earn cash interest, you’ll pay taxes on the rewards that you earn at the standard rate, in line with your tax bracket. In other words, if you earn $500 worth of interest, you’ll be issued a 1099 for that amount.
If you open a Bask Mileage Savings Account, it works a bit differently, since miles don’t have a value that everyone agrees on. When Bask Bank issues a 1099 for AAdvantage miles, they’re only valued at the very conservative amount of 0.42 cents each. In other words, they’re only taxed as if you’re earning a 0.42% APY.
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.
Should you earn cash or miles with Bask Bank?
With the current value propositions of Bask Bank savings accounts, are you better off earning AAdvantage miles or cash back?
- I value 2.5x AAdvantage miles at a 3.75% annual return, given my valuation of 1.5 cents per mile
- That’s less than the 4.75% annual return you can currently get if you choose to earn cash interest
One further consideration is the tax implications. If you were in the highest tax bracket of 37% (which is worst case scenario), you’d potentially be looking at the following after tax savings:
- 3.36% on an account earning AAdvantage miles (which is 3.75% minus 0.39%, which is the valuation of 0.42 cents per mile minus 37%)
- 2.99% on an account earning cash interest (which is 4.75% minus 37%)
So if you value AAdvantage miles similarly to how I do, and if you were in the highest tax bracket, then I do think the mileage savings account is currently the better value. Meanwhile if you had lower tax obligations associated with this, then the math could work out better for the interest savings account.
Bottom line
For me, Bask Bank offers the perfect combination of ease and rewards when it comes to savings accounts. The way I view it, the value proposition of Bask Bank comes down to:
- Bask Bank has no fees, and a great user experience, so it’s easy to use (unlike some other savings accounts I’ve used in the past)
- Bask Bank gives you the flexibility to earn AAdvantage miles or cash, and which of those is a better value depends on your own valuation of miles, your tax bracket, and what the current earnings rates are
- Bask Bank’s earnings rates are incredibly competitive, with no minimum or maximum amount you can be rewarded for; 4.75% is an industry leading APY
If you don’t yet have a Bask Bank account, it absolutely could be worth signing up, especially in the current interest rate environment. You’re basically throwing money out the window if you have a lot of cash sitting around in a no or low interest rate savings account.
If you want to learn more about Bask Bank or want to apply to open an account, follow this link.
I have been using Bask Bank for a few years and am overall happy with their service. They are constantly updating / increasing their savings interest rates based on the Feds adjustments.
As another reader has commented, they do charge for outgoing wire transfers regardless of the amount your have with them. ACH transfers are free.
If you need wire transfers frequently, the CIT Bank may be the better options as they don't charge for...
I have been using Bask Bank for a few years and am overall happy with their service. They are constantly updating / increasing their savings interest rates based on the Feds adjustments.
As another reader has commented, they do charge for outgoing wire transfers regardless of the amount your have with them. ACH transfers are free.
If you need wire transfers frequently, the CIT Bank may be the better options as they don't charge for wires if you maintain a $25K balance.
>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.
That's not really how it works considering no one's effective tax rate is 37%.
Also if you're making more that $500k in income there's a lot better options than a savings account...
Is the recent trip report series ever going to be completed?
Go apply few credit cards using OMAAT referrals and stop using ad-blocker. That might make him work faster.
4.75% is competitive with money market rates for folks in lower tax bracket (or in tax free states like FL).
3.75% (for AA miles, using Ben's valuation) isn't.
If it is based on deposits you could deposit a little bit of money at the start and then a lot and often move money around to get the most advantage, but I am not sure what the advantage of AA points. Your return is based on a hypothetical cash value but it really depends how you use the points.
I would like to share my experience with Bask Bank minimum amount policy. I had Bask Bank savings account for more than a year earning AA miles. It all worked fine, until one day I withdrew all funds leaving my savings account with zero balance. One month after withdrawal, I deposited 50K and it was returned to my Bank. When I contacted Bask Bank to find out why my funds were returned, I was told...
I would like to share my experience with Bask Bank minimum amount policy. I had Bask Bank savings account for more than a year earning AA miles. It all worked fine, until one day I withdrew all funds leaving my savings account with zero balance. One month after withdrawal, I deposited 50K and it was returned to my Bank. When I contacted Bask Bank to find out why my funds were returned, I was told my savings account was closed since it has zero balance for more than 15 days. There was no communication before or after closing my account. There was no closed account or returned funds status in the app/web. When I requested them to reopen the account, they refused and advised me to open a new online savings account and submit all documents as if I am a new customer. I no longer use Bask Bank.
4 miles per dollar and i would consider it. I dont think the miles are keeping up with the rates.
No thanks but 250k FDIC is not enough after recent events especially when many big investment banks like UBS or Goldman will segregate your savings into 15 banks giving you close to 4 mil in FDIC at no extra cost. No checking or wire fees and im getting 4.9% on my savings.
I use bask but it's not ideal. Wires are processed last in line of priority and have done "manually" but sending to customer care. I have millions in there and they still charge $25 in wire fees. Plus transfers are capped at $100k at a time. Also, now CIT is higher than Bask (4.6 vs 4.5) with much easier transfers.
I would open a savings account if there was an earning of .5 LP per $1. American would have to give something in terms loyalty points.
@Lucky: Both me and my wife have AA miles-earning Bask accounts. Have been using those miles for Qsuites for the entire family twice a year. One additional benefit I realized was when I did an analysis of how much it would cost to fly to the Maldives on Qatar Airways if buying the tickets with credit card ($8,000) versus AA miles (140k). That is that even the $8k ticket is non-refundable vs the fully refundable...
@Lucky: Both me and my wife have AA miles-earning Bask accounts. Have been using those miles for Qsuites for the entire family twice a year. One additional benefit I realized was when I did an analysis of how much it would cost to fly to the Maldives on Qatar Airways if buying the tickets with credit card ($8,000) versus AA miles (140k). That is that even the $8k ticket is non-refundable vs the fully refundable award ticket. Refundability of a ticket is important for us when planning trips 330 days in advance.
Ben mentions keeping most of his liquid cash in a savings account and transferring money into his checking account as needed. However most savings accounts have limits on the number of transfers one can make per month from a savings account.
@ GBOAC -- To be clear, I'm not moving around money daily. The idea is simply that many people who keep an "emergency fund" might keep that in their standard checking account, when they'd be much better off putting that in a savings account that can be liquidated at any time.
Also, for what its worth, the federal government did away with the no more than 6 transfers from savings account regulation during the pandemic (and has since made it permanent). So there is no limit on number of transfers from savings accounts - at least no regulation like there was before. What individual banks do is up to them (though many have done away with the limit).
https://www.bankrate.com/banking/federal-reserve-lifts-regulation-d-withdrawal-limit/
Lucky, you can easily get close to 5% on short term investments/CDs/money market from any of the big firms (Schwab, Vanguard, Fidelity, etc.). Basically, by investing $10k you will be getting $500 in interest annually. Assuming top 37% federal tax bracket, it is $315 after tax. By going with Bask AA miles, $84 will be reported to IRS and you will be paying $31 in taxes (same 37% bracket). Thus, your out-of-pocket cost of 20k...
Lucky, you can easily get close to 5% on short term investments/CDs/money market from any of the big firms (Schwab, Vanguard, Fidelity, etc.). Basically, by investing $10k you will be getting $500 in interest annually. Assuming top 37% federal tax bracket, it is $315 after tax. By going with Bask AA miles, $84 will be reported to IRS and you will be paying $31 in taxes (same 37% bracket). Thus, your out-of-pocket cost of 20k AA miles will be $315+$31=$346 or 1.73 cents/mile. This price is fine but higher than ca. 0.15 cent/mile. Someone could be paying states and local taxes and this will lower the cost per mile.
To me, there are no reasons to convert my cash in AA miles which are going the way of Sky pesos anyway.
@ Alex77W -- I totally agree with you. As I stated in the post, right now I think it's better to earn 4.65% interest with Bask Bank than it is to earn 2x AAdvantage miles, at least based on my valuation of things. I love being able to stick with one bank and having the option of either savings structure.
Is it as simple as checking a box online to say “I’d like to switch to earning miles/cash now”? Or is it actually separate accounts that you switch money between?
It is separate Bask Bank accounts, but they are easy to open. I switch recently from earning miles to cash for same reasons as Ben lists. I personally value AA miles at 1.3cents per mile and while you do get taxed less on the mileage earning, right now the 4.65%APY cash is better IMHO
@eaci A bank is required to issue 1099-INT (or 1099-DIV) for any interests (or dividend) earned during the tax year. Nowadays, some banks will issue those electronically and will not be sending you a paper copy based on what you have sign on-line. Then you would have to login to your bank and look for tax documents. Alternatively, TurboTax will directly import your tax info from your financial institutions.
Looks significantly less good than Amex. And I've literally never been issued a 1099 by any bank for savings account interest.
I definitely get 1099s for bank account savings interest.
Amex is better than 4.65%? thought they are only 3.75%?
And i also get 1099 for bank saving interest. Unless you bank with regular big bank with basically 0% interest and get less than $10/yr, then yes, you prob wont get a 1099.
Either you’re earning less than a threshold amount ($10/yr?), your bank’s doing it wrong, or you’re clueless.
Take your pick.
I expect I'm earning less than the threshold amount (which I expect is $600).
Nope, the threshold is indeed $10. Looks like I need to investigate. Thanks all! :-)
I use AMEX and I most definitely get 1099s for savings, and have done so for the past decade.
You tax dodging brah?
If you're not getting a 1099 and thus not reporting INT income, get ready for an audit in your future. I'd sort that out with your bank ASAP.
Are you in USA? Because that's how the IRS rolls here. I get a 1099 from Bank of America every year for the whopping $11 in interest they pay me (not my main savings bank - I do use Bask for that)
At this point, the mileage option is less interesting given 4.5% to 5% savings accounts, and T Bills and T Notes at close to 5% yield.