Bask Bank raises the mileage earning rate on its AAdvantage savings account — what you need to know

Bask Bank and American Airlines have an existing partnership that lets AAdvantage members earn interest in the form of miles. So instead of earning interest on your money, you earn travel rewards instead. This can be advantageous if you value AAdvantage miles highly — especially given the relatively low rates of return on many savings accounts.

On Monday, Bask Bank announced that it’s raising the earning rate on its Mileage Savings Account for the first time since it launched in 2020. Depending on how much you keep in a Bask Bank account, this could mean thousands of extra AAdvantage miles per year.

Let’s take a closer look at Bask Bank’s new Mileage Savings Account rates and how you can use the account to earn miles on your cash savings.

Sign up for TPG’s daily newsletter to get points and miles coverage like this delivered to your inbox.

Bask Bank’s new AAdvantage earning rate

Effective Aug. 1, Bask Bank has raised the earning rate on its Mileage Savings Account from 1 mile to 1.2 miles per dollar saved per year. This new earning rate applies to new and existing Bask Bank accounts.

TPG currently values AAdvantage miles at 1.77 cents apiece, effectively giving you a 2.12% return on your funds yearly. In practice, this can be much higher or lower depending on how you choose to redeem your miles.

This is a far higher return than most traditional banks offer on savings accounts. For example, Chase’s standard savings account offers just 0.01% annual percentage yield on deposited funds. Likewise, at the time of writing, many high-yield savings accounts like Marcus by Goldman Sachs earn 1.5% APY.

Bask Bank’s Interest Savings Account earns 2.02% APY at the time of writing, which is still better than most other accounts.

Related: How to earn miles in the American Airlines AAdvantage program

What is Bask Bank’s Mileage Savings Account?

As discussed, Bask Bank’s Mileage Savings Account is a savings account that earns AAdvantage miles instead of interest on deposited funds. The bank is owned and operated by Texas Capital Bank, and all funds are insured by the Federal Deposit Insurance Corp. There’s no monthly account fee to keep your Mileage Savings Account open, regardless of how much you deposit in the account.

Miles earned with the Mileage Savings Account are accrued on a daily basis and then deposited in your AAdvantage account monthly. Your monthly payout is based on your account’s average monthly balance. These miles are the interest you earn on your savings, so no cash interest is earned on deposited funds.

So if you keep $70,000 in your Mileage Savings Account for one year, you’d earn 84,000 AAdvantage miles based on the new earning rate of 1.2 miles per $1 saved. This works out to roughly 7,000 AAdvantage miles per month — though the daily accrual process means that you’d earn slightly more for months with 31 days and a bit less in other months.

To put this into perspective, 84,000 AAdvantage miles is more than enough for a one-way business-class ticket to Asia or Europe when saver award space is available.

It’s also worth noting that Bask Bank frequently offers sign-up bonuses for new members. Right now, you can earn 1,000 bonus AAdvantage miles when you keep a $5,000 balance for 90 consecutive days within 120 days of opening a new Bask Mileage Savings Account. This is only available to new Bask Bank members.

If you have cash in a savings account and would rather earn miles, Bask Bank could be a good option for you. Just note that you don’t earn Loyalty Points with Bask Bank, so if you’re chasing AAdvantage elite status this year, check out TPG’s full guide to earning Loyalty Points for other options.

Related: How I plan to earn American Airlines Executive Platinum status with Loyalty Points

Finally, it’s worth noting that these miles are considered income for tax purposes. Per Bask Bank’s FAQ page:

AAdvantage miles awarded by Bask Bank for maintaining a deposit balance are viewed as interest income. This income will be reportable to the IRS and to you for the year in which the miles were posted to your AAdvantage account.

As a result, you’ll receive a 1099 for these earnings, with the taxable value of 0.42 cents per mile.

Bottom line

Bask Bank has raised the earning rate on its Mileage Savings Account from 1 mile per dollar saved annually to 1.2 miles per dollar saved annually.

Depending on how much you value AAdvantage miles, this could be a great way to earn miles on your savings. Just do the math (and check with a financial advisor) to see if it makes sense to earn miles instead of interest on your savings. Like anything in the points and miles world, AAdvantage miles could be devalued without notice, effectively devaluing the mileage interest you’ve earned on your savings.

Featured photo by STEFANI REYNOLDS/AFP/Getty Images.