Bask Bank

New Bask Bank Bonus Offer for New Customers

Bask Bank is out with a new offer on its Mileage Savings Account that will award you 20,000 bonus AAdvantage® miles for $50k in deposits held for 180 consecutive days for new customers.

I haven’t written as much about Bask Bank simply because with interest rates so high, the mileage vs. interest equation has changed for the first time since I started covering Bask Bank (even back when it was Bank Direct).

Currently, you can earn 2.5 miles per dollar per year on a Bask Mileage Savings account or 5.10% Annual Percentage Yield (APY)* from a Bask Interest Savings account. I’ll use those to compare the after tax opportunity of each in this article since you can so easily move money back and forth (and soon, Bask will even launch a checking product, as many would like to use Bask as an all-in-one bank).

I value American Airlines AAdvantage® miles at 1.5 cents each. As you know, there are some great opportunities to use these on First and Business Class awards to far-away destinations. The 1.5 cent value melds those opportunities with “easier” redemptions like revenue-based redemptions on American Airlines flights. 

But of course, you can do so much better and that is where the opportunity lies with miles over interest, especially due to the difference in taxation which I’ll remind you about below.

Since we are talking about this in the context of $50,000 in deposits (to earn the 20,000 AAdvantage® bonus miles), let’s also use a full year of deposit time for ease of comparison. I’m also going to use both of today’s current Bask Bank rates as I can’t predict the future. As mentioned above, that is 2.5 miles per dollar per year for the Mileage Savings account and 5.10% APY* on the Interest Savings Account.

If you put $50,000 into a new Bask Bank Mileage Savings account today and held for a year (although to be clear you’d get the 20,000 miles after 6 months) you would have 145,000 miles.

If you put that into the Interest Savings account, with interest compounded daily, you would have earned $2,610.46 in interest.

Now we have to normalize for income tax. While of course you pay income tax on interest, the miles earned at Bask Bank are valued for tax purposes at 0.42 cents each.

So, assuming a 30% total tax rate, you would pay $783.13 in tax on the cash interest or $182.70 in tax on the miles. That’s a roughly $500 difference!

So now we have 145,000 miles which you only paid $182.70 in tax on vs. $2,610.46 in interest reduced to $1,827.33 after tax. (even less if your tax rate is higher).

Redeeming 145,000 Miles

The obvious question now is what we can redeem 145,000 miles for that will unequivocally beat that $1,827.33 after accounting for the $182.70 we are paying in tax on the miles.

And the truth is that it’s pretty easy if you are flexible with award availability – which is always part of the equation in this hobby.

Middle East and Indian Sub-Continent

While unfortunately it’s become very difficult to fly Qatar QSuites with AAdvantage® miles due to Qatar not releasing space, know that you can still fly them with AAdvantage® miles, on routes like London to Doha. You can even sometimes find from Canada, like Montreal (YUL) nonstop and even Boston, Washington DC and Seattle – but you’ll have to hunt. If you can find space, that will be just 70,000 miles and a trivial amount in taxes and fees.

Flying the Qatar Airways QSuites
Flying the Qatar Airways QSuites

But since most people will want to fly from the US, I will move on to what you can more easily book from the US.

Etihad became an AAdvantage® partner fairly recently and that leaves the Middle East and Indian SubContinent wide open for awards. You’ll pay 70,000 miles in Business Class and 115,000 miles in First Class.

Business class is scarce but I’m finding quote a bit of First Class space from New York, for example, at 115,000 miles in First, if you can fly within the next 30 days. Look for a 777 if you want the Etihad Apartment but First Class on the 787 is no slouch! When available, you can carry on to anywhere else in the Middle East or Indian Sub-Continent (like MLE in the Maldives) for no additional miles as long as the stop is less than 24 hours.

Here’s an example where I can fly First to Abu Dhabi for 115,000 miles.

That sure beats a cash price of over $8,000.

Now, if I were you, I would point out that a round trip (which we don’t have enough miles for under this example where we have 145,000 earned miles) is less than 2 X $8,470. 

And you are, of course, correct! It would be $11,036.

So, to balance out the math, let’s divide the round-trip cash price to $5,518 each way.

Whereas we could have earned that $1,827.33 in interest, we scored a $5,518 flight and still have 30,000 miles to spare!

Here’s the Etihad First Class Apartment if you are lucky enough to find award space on it (note the First Class seat on the 787 is not quite this big):

Etihad First Class Apartment
Etihad First Class Apartment

Now what can we do with those extra 30,000 miles we have left?

Well, ever since AA went to a mostly dynamic pricing model for its own flights, there are sometimes somewhat crazy deals if you really poke around. On August 23rd, I could fly in AA’s very nice transcontinental product for just 27,000 miles and $5.60.

That same flight is $659 in cash.

So under my challenge of not going over 145,000 miles, I got a $5,518 flight in First Class on Etihad to Abu Dhabi and a $659 flight from JFK to LAX in Business Class.

If you’re curious as I was about that 39,500 First Class seat that would have pushed us over 145,000 total miles spent, it was selling for $1,210. Note that the First Class seats on the JFK-LAX/SFO routes will be going away in the next couple of years so try it while you can! 

Asia

Business Class is just 60,000 miles each way to Japan, which fits neatly into our stash of miles for a round trip. Let’s consider this flight for a long weekend from Los Angeles to Osaka, Japan.

This flight would sell for $5,628.

You’ll have $50 in taxes on the flights plus the $182.70 in interest we paid (estimated 30% blended tax rate) for a total of $233.70 in cash vs. the $1,827.33 we would have had in cash interest after tax. And you’d have 25,000 miles left over….

Elsewhere in Asia is just 70,000 miles each way / 140,000 miles return, so you’d similarly be able to crush the value of straight interest cash on any redemption on a carrier like Japan Airlines or Cathay Pacific in Business Class.

I do want to stress, though, that availability can be challenging and so while you are getting triple the value, you do give up some flexibility on dates/routes.

Europe

Europe is much easier. I just did a quick search to Barcelona and, by being flexible, was able to nab this flight to Barcelona, Spain on AA metal for just 138,000 miles and $46 in tax.

Here’s a great example of using AA miles to Europe and saving quite a bit vs. cash:

While you’ll want to avoid partner flights on British Airways due to higher fees, there’s lots of opportunity across the pond in Business Class on Finnair (which has a beautiful modern Business Class product), Iberia, or American’s own metal. You’ll pay 57,500 miles on Finnair or Iberia and a touch more (variable) on AA but starting at around 62,000 miles.

In this case I’m paying $46 plus my $182.70 in income tax on the miles or $229 for this flight vs what would have cost me $3,785 in cash. In the 5.10%* savings account, my after-tax interest was just half that ($1,827.33). 

In this case I could essentially fly to Barcelona on my mileage interest where my savings interest would have only been half of the amount I needed for this Business Class flight.

As I also mentioned partners like Finnair, I wanted to show an example of that as well, the math of which works out even better, but similar enough that I won’t force you to read another calculation!

aa aadvantage finnair

South America

Heading to Argentina, I was able to get a similar deal as that flight to Europe. In this case it would cost me a few more miles, at 137,500 (still under the 145,000 I earned!) plus $100 in taxes and fees for the round trip.

This would have cost $3,349 in cash (cheapest nonstop option).

So here, for $100 in taxes/fees plus that $182.70 in income tax or $282 total, I got a flight that would have cost $3,349. Once again, my $1,827.33 in after tax interest on a savings account would have left me $1,500 short on this same ticket. 

Bottom Line

It’s easy to think that it’s not worth collecting miles over cash while interest rates are high. And it’s a great feature of Bask Bank that it’s so easy to move money between their high yield interest savings account and their mileage savings account.

However, I think the above examples show why you may want to diversify and have some of your liquid cash earning miles instead of interest – especially if you have a trip in mind, and especially while Bask Bank is offering 20,000 AAdvantage® bonus miles when you are a new customer and deposit $50,000 for at least 180 consecutive days.


Click here to open a Bask Mileage Savings account and earn 20,000 AAdvantage® bonus miles when you are a new customer and deposit $50,000 for at least 180 consecutive days.


*Annual Percentage Yields (APY) and Interest Rates shown are offered on accounts accepted by Bask Bank and effective per the dates shown above, unless otherwise noted. Annual Percentage Yield is variable and subject to change at any time. No minimum balance requirement and no monthly account fees. Must fund within 15 business days of account opening.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Texas Capital Bank, N.A.

Texas Capital Bank d/b/a Texas Capital is a member of FDIC. Bask Bank is a division of Texas Capital Bank. Mile awards are subject to change at Bask Bank’s sole discretion. Please see Terms and Disclosures for details.

American Airlines reserves the right to change the AAdvantage® program and its terms and conditions at any time without notice and to end the AAdvantage® program with six months notice. Any such changes may affect your ability to use the awards or mileage credits that you have accumulated. Unless specified, AAdvantage® miles earned through this promotion/offer do not count toward elite-status qualification or AAdvantage® Million MilerSM status. American Airlines is not responsible for products or services offered by other participating companies. For complete details about the AAdvantage® program, visit aa.com/aadvantage.

American Airlines, AAdvantage®, the Flight Symbol logo and the Tail Design
are marks of American Airlines, Inc.

Thoughts?

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1 COMMENT

  1. I think the $50,000 promotion throws an interesting wrench into the thinking of potential customers.

    The thing is, putting $50,000 in the account for six months already gives you 63k AA points. And this is not a fixed requirement – you can put less money, and get less points accordingly, or more money and get more points.

    But then, the promotional offer hits: $50,000 for six months for an additional 20k.

    My brain had a real hard time navigating the double clause to assess its pros/cons. I was making sense of it in my head, and often I would get stuck on “ugh it’s very hard for me to guarantee that I’ll have $50,000 untouched in that account for that long… and then I won’t get any points? This doesn’t sound worth it”, and I had to constantly remind myself that the 50k is only for the extra 20k requirement, and that I’m getting the 2.5% AA no matter what the amount is. So I had to parse this as “keep $50,000 (or less) for 63k in 6 months, and if I manage to keep the $50,000 balance, then I’ll get an extra 20k for 83k total”.

    I think for a lot of people doing points, they may get stuck in a similar loop of thinking and the promo may actually be detrimental to getting people to sign up. Sure, once people sign up, it encourages them to keep the very high balance of $50,000. But it increases the initial hurdle a lot.

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