5 Reasons You Should Consider an American AAdvantage® Account with Bask Bank
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5 Reasons You Should Consider an American AAdvantage® Account with Bask Bank

Editor's Note: We have learned that the sign-on bonus, the feedback bonus and the balance bonus, all of which are described below, will continue to be extended to users who register for new accounts through June 30, 2020. These bonuses will no longer be offered after that time. If you have considered opening a Bask Bank account, we would recommend that you register and fund the account before that day. The proposition will remain attractive, but will not include the bonuses after that date.

Ordinarily, it is BestCashCow’s view that consumers, young and old, should keep a certain part of their assets in the highest yielding online savings and online CD accounts that they can find. We also encourage folks to have a look at local savings and local CD rates before they jump into online accounts and those rates can be competitive in certain markets.

It is almost unprecedented that we would provide advice that runs contrary to that recommendation, but this is one of those times.

The basics of a Bask Bank Account

Bask Bank, a new subsidiary of Texas Capital Bank, is offering depositors 1 American Airlines AAdvantage® mile for every dollar kept on deposit for one year. If your account has an average balance of $100,000 in month 1, you will earn 8,300 AAdvantage® miles in that month. If you maintain the same balance in month 2, you will earn 8,300 AAdvantage® miles in that month. And, if you hold that average balance for a full year, you will get 100,000 AAdvantage® miles over the course of the year. The account has no fees and no minimum balances.

The bonuses in a Bask Bank Account

Bask bank is currently giving a 5,000 AAdvantage® mile sign-up bonus for funding an account with $1,000 for 30 days. They will also give you a 1,000 AAdvantage® miles “feedback bonus” for rating the account opening process on their website or mobile app. While that is an easy 6,000 AAdvantage® miles on top of the base miles you earn, it the “Balance Bonuses” that make Bask Bank especially compelling. They are as follows:

  • $25,000 held on deposit for one year earns a 10,000 mile bonus,
  • $50,000 held on deposit for one year earns a 20,000 mile bonus,
  • $100,000 held on deposit for one year earns a 40,000 mile bonus.

According to the terms and conditions, these Balance Bonus are paid semi-annually.

With all bonuses factored in, $50,000 held in Bask Bank for one-year will earn 76,000 AAdvantage® miles and $100,000 held in Bask Bank for one-year will earn 146,000 AAdvantage® miles.

5 Reasons Why this is Attractive

First, the savings rates among well-known online banks is currently between 1.70% and 1.85%. In the best case, $50,000 deposited at 1.85% and held there for one-year (if the rate does not decline further) will generate $925 in fully taxable income. But, we suspect that the Fed may lower rates again in 2020 and you may not even be able to generate the full $925.

Second, even if you get the $925, there is nothing too exciting about $925, especially when that money is fully taxable. It is important not to lose principal, but the interest that you are going to make is $925. $925 on $50,000 just isn’t sexy. By contrast, the 76,000 AAdvantage® miles (or 146,000 AAdvantage® miles if you deposit $100,000) that you could be earning with a Bask Bank account can literally get you places.

Third, American Airlines AAdvantage® miles have real value. In its credit card section, BestCashCow values AAdvantage® miles as easily being worth 1.80 cents each when redeemed for travel on American Airlines. Applying that value, the 76,000 miles are worth $1,368. (We should note here that the IRS too puts a value on these miles, but that value is lower than BestCashCow’s and Bask Bank is going to send you a 1099-INT each year that values the miles at 0.42 cents each).

Fourth, American Airlines AAdvantage® miles have aspirational value. I personally have redeemed American Airlines miles at over a 5 or 6 cent per mile valuation on Business Class seats to Hawaii, London and Madrid. Some friends and family members have found even more valuable redemptions when redeeming AAdvantage® miles on some of American Airlines’ OneWorld partners. While I might not necessarily have taken these trips without the miles, there is real value in the fact that these miles have taken me to places that I might not have gone and in a class of service that I might not have flown.

Fifth, airline miles and loyalty points from major airlines like American are the ultimate “alternative” currency. It is worth noting that American AAdvantage® miles have largely held their value for decades. Management at American (and United and Hyatt for that matter) have realized real value in their loyalty programs, and created an ecosystem in which credit card companies have flourished through offering their currencies. Due to the dependence on these programs, devaluations are likely to be small and incremental. Unlike bitcoin or gold or some other alternative currency, these reserves can make sense. I’ve also redeemed American AAdvantage® miles to avoid the high cost of last minute tickets when personal or business travel has required me to travel immediately, and now that American has removed its $75 close-in ticket fee, this miles are even more valuable for this.

For many years, BestCashCow has strongly encouraged folks who are at all inclined to travel to opt for credit cards with travel rewards programs over cash-back programs. Rather than just be frustrated by falling savings rates, 2020 might be the year to also take airline miles over interest.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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  • Malone

    February 11, 2020

    This is a good deal. When it is running a sale for its best customers, American will sell you miles around 2 cents a pop (they have a Valentines Day sale right now). Ordinarily, it is closer 3 cents a pop. I've bought miles at these prices to arbitrage versus the cost of a straight ticket purchase. As I see it, if you are just over one of those Balance Bonus levels, these points are closer to a penny a pop. This beats the other choices for cash in 2020 which involve earning below the inflation rate and watching rates fall even further.

  • Jennifer the Babe Accountant

    February 11, 2020

    I ran some numbers in my comment your earlier article here: https://www.bestcashcow.com/bask-bank-american-airlines-aadvantage-miles-silliness.html

    I was talking to some friends around the office this morning discussing this account and came back to this site and to my numbers. The best 1-year CD rate that most of us can get is now 2.15% (excluding some credit unions in Chicago which are a little higher) so I am now using that number. Using that rate, with $100,000 you are buying the miles at 1.0305 cents per mile. 2.15% is the rate I am using because it is the best rate available. If you are getting a lower rate, like the 1.70% savings rate that is all over this site and in this article, you are buying the miles for only 0.8517 cents per mile.

    The numbers are actually even better right on the lower bonus levels that you have here.

    With a $50,000 deposit, your cost is 0.9968 cents using the 2.15% rate and 0.8251 using the 1.70% rate.

    With a $25,000 deposit, your cost is 0.9368 cents using the 2.15% and 0.7776 cents using the 1.70% rate.

    I've graphed this out and my graph shows peaks at those deposit levels with deterioration until you get to the next balance bonus level.

    This is all quite interesting to me and we've been debating it all week around the office!

  • 10738augusta

    February 12, 2020

    Its interesting. We cannot have too many American miles. From Philadelphia they get us anywhere and my husband and sons and their wives all love to take exotic vacations. We've used these to get to Aruba, London, Paris, Hawaii and Oz, usually in biz class. Some say these points are worthless and cannot be used, but these vacations are possible because of them. We plan ahead and usually find availability. We use all the American cards but aren't getting the points fast enough. This is an honest, above-board way to reload. Sending it around, and going to make sure everyone in my family takes a look at this.

  • Dgot

    February 14, 2020

    Opening an account with $1,000 is an easy 6,000 points in 2 months. That's a no brainer. I also makes sense to be to fund the account around just over the $25,000 or $50,000 levels. I would probably do $100,000 if I had that kind of cash. It is more challenging to find good availability on American, but it will become easier in the next recession.

  • McDo076

    February 15, 2020

    I recently opened a Citibank AA card for 50,000 AA miles, a Barclays AA card for 60,000 AA miles, a CitiBusiness AA card for 70,000 points and a Barclays small business AA card for 60,000 points.That is 240,000AA and it didn't cost me a penny in lost interest!It is all right here on your site ARI! https://www.bestcashcow.com/credit-cards/business-rewards

  • ROD43

    February 21, 2020

    I ran the numbers. Mine are consistent with Jenn's. This is a very good deal for anyone who flies American Airlines at the $25000 level, at the $50000 level and at the $100000 level.

  • Jay Presey

    February 27, 2020

    Seems like a good deal if I could be sure that American's management isn't in the process of converting their frequent flier miles into be worth as much as Delta SkyPesos.

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