Bask Bank Review – Earn Airline Miles for Saving, Not Spending

All airline loyalty program members earn frequent miles for every dollar spent on airfare and other select purchases with their favored airlines. Those with co-branded airline credit cards earn miles on other purchases too.

In other words, you have to spend dollars to earn miles. There’s no way around it.

Or is there? All you need is the right bank account and a free American Airlines AAdvantage® loyalty program membership.

Bask Bank: A New Way for Travelers to Save

That bank account is the Bask Savings Account, an FDIC-insured savings account backed by Texas-based Bask Bank. It’s one of the only mileage-earning deposit accounts around today and the only savings account that earns American Airlines AAdvantage® miles, not interest.

Account holders can redeem those miles for award airfare and upgrades with American Airlines and its partners, plus a host of options unrelated to airfare as well – see all the options on American Airlines’ website.

Airfare redemptions begin at 7,500 miles for short-haul economy one-ways and 12,500 for economy one-ways within the contiguous U.S. and Canada.

Bask Savings Account customers earn 2.5 AAdvantage® mile for every $1 on deposit with no minimum balance required. Multiple bonus opportunities significantly boost potential first-year mileage earnings. And Bask Bank charges no monthly maintenance fees, maximizing depositors’ returns.

The Bask Savings Account does have some notable drawbacks. Most importantly, per IRS guidelines, the bank treats miles as interest for tax purposes. That means account holders must report earned miles to the IRS and state revenue authorities each year at Bask Bank’s established per-mile valuation, which is $0.0042 for the 2019 tax year.

Bask Bank also doesn’t allow joint accounts – a drawback for spouses and partners with jointly managed finances – and doesn’t offer any deposit or loan products other than the savings account.

But let’s not sell Bask Bank short. If you’re a regular American Airlines flyer eager to earn AAdvantage® miles without spending a dime out of pocket, you should give the Bask Savings Account a close look.

Key Features

Bask Bank account holders benefit from low fees and an ongoing mileage rewards program, among other key perks.

Earning AAdvantage® Miles on Deposits

Every $1 deposited in the Bask Savings Account earns 2.5 AAdvantage® mile per year. In simple terms, that means a $50,000 balance deposited on Jan. 1 and maintained through Dec. 31 with no further deposits or withdrawals earns a total of 125,000 AAdvantage® miles through the end of the year.

Specifically, each Bask Savings Account customer earns miles monthly based on their average monthly balance. Bask Bank uses the following formula to calculate monthly mileage earnings:

([Average monthly balance] / 365) x [number of days in the month]

Bask Bank rounds monthly mileage earnings up to the nearest whole number. So a $50,000 average monthly balance in a 31-day month would earn 5,096 miles for the period: (125,000 / 365) x 31 = 10,616.44 = 10,616.

Bask Bank awards miles for each month on or before the fifth business day of the subsequent month. But as with all other awards, miles can take as long as eight weeks to post to customers’ AAdvantage® loyalty accounts.

Tax Statements

The IRS requires Bask Bank to treat AAdvantage® mileage earnings as income and Bask Bank reports each year’s cumulative payouts to the IRS. Each January, Bask Bank sends customers a 1099-INT statement reporting cumulative mileage earnings for the previous year at a valuation determined by Bask Bank.

Bask Bank assesses AAdvantage® miles at $0.0042 each, but values are subject to change at the bank’s discretion.

Account Fees

The Bask Savings Account has no monthly maintenance or minimum balance fees. That’s notable because Bask Bank’s sister bank, BankDirect, charges a monthly maintenance fee on its superficially similar mileage checking account.

See Bask Bank’s terms and conditions for more information about possible fees.

Advantages

Bask Bank customers enjoy multiple opportunities to earn American Airlines AAdvantage® miles without spending a dime. No account fees or minimums sweeten the deal.

1. No Need to Spend to Earn AAdvantage® Miles. Bask Savings Account customers earn 2.5 AAdvantage® mile for every $1 on deposit every year. That’s a marked contrast to co-branded airline rewards credit cards, which condition mileage payouts on card spending outside rare, restricted, one-time account-opening bonus opportunities.
2. No Monthly Maintenance Fee. Bask Bank doesn’t charge monthly maintenance fees. That’s a significant advantage over BankDirect’s mileage checking account, another AAdvantage® mile account backed by Bask Bank’s sister institution, Texas Capital Bank.
3. No Minimum Account Balance. There’s no minimum deposit required to open a Bask Savings Account and no ongoing account minimum, though Bask Bank does reserve the right to close accounts not funded after 60 days.
4. No Maximum Mileage Earnings. The Bask Savings Account has no maximum balance restrictions, so there’s theoretically no limit to the number of miles account holders can earn on deposits. However, FDIC insurance applies only to the first $250,000 on deposit.
5. The Right Redemption Strategy Significantly Increases the Account’s Value. AAdvantage® miles – and airline loyalty currency in general – achieve their best value when redeemed for long-haul flights in higher fare classes – think transoceanic business and first-class fares. You can easily extract $0.03 or more per mile on such redemptions, far more than Bask Bank’s rock-bottom $0.0042-per-mile assessment.

Disadvantages

Bask Bank’s principal drawbacks include federal — and possibly, state — tax on mileage earnings, questionable value in higher-interest-rate environments, and limited utility for customers far from American hubs.

1. AAdvantage® Miles Are Taxable. Per IRS guidelines, Bask Bank treats AAdvantage® miles earned on savings deposits as taxable income. You must report your annual earnings as interest income at Bask Bank’s valuation of $0.0042 per mile as of the 2019 tax year. In reality, AAdvantage® miles’ average redemption value is closer to $0.01 per mile, but taxes still take a bite out of earnings.
2. High-Yield Savings Can Offer a Better Return, Depending on Your Redemption Method. The value of a mileage deposit account increases as cash interest rates decline. Still, cash rates have to be very low for mileage checking to offer clearly superior value. Look at it this way: If you earn 1 AAdvantage® mile per $1 on deposit per year, and your average redemption value is $0.01 per mile, your total earnings are the equivalent of 1% annual percentage yield – less than most high-yield savings accounts. If you’re consistently able to extract $0.02 per mile or more, the calculus tips in Bask Bank’s favor.
3. Limited Value for Customers Far From American Airlines Hubs. The Bask Savings Account is a valuable resource for frequent American Airlines flyers located close to the Airline’s major hubs, such as Dallas, Los Angeles, Phoenix, Chicago, Miami, Charlotte, Washington D.C., New York, and Philadelphia. For frequent travelers not located near a major American hub — and especially those living near smaller airports not directly served by American Airlines — Bask Bank has limited utility.
4. No Joint Accounts. Bask Bank doesn’t currently offer jointly owned accounts for spouses and partners with joint finances, though that could change in the future.
5. Miles Don’t Count Toward AAdvantage® Elite Status. AAdvantage® miles earned on Bask Savings Account deposits don’t count toward the AAdvantage® program’s elite status tiers. If you’re chasing higher status levels, you can’t get those with Bask Bank – you need a high-end credit card like the Citi/AAdvantage® Executive World Elite Mastercard.

Final Word

Bask Bank designed its savings account for only one group of customers, albeit a big one: the 500,000 travelers who fly American Airlines each day.

If you’re among them, there’s little downside to opening a Bask Savings Account. With no minimum deposit or ongoing balance requirements and no monthly maintenance fees, every dollar on deposit earns 2 AAdvantage® mile every year.

Even budget-friendly airline credit cards, like the AAdvantage® MileUp Card from Citi, demand that you spend dollars to earn miles. A Bask Savings Account actually pays you to save.

Bask Bank, Member FDIC