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Effective today Bask Bank is now awarding 1.2 American AAdvantage miles per dollar on its Bask Mileage Savings Accounts, an increase of 20%. Rising interest rates aren’t just good for high yield savings accounts that pay out in cash (Bask Bank has a good Interest Savings Account, too). They are good, it seems, for your mileage account as well.
I value American Airlines AAdvantage® miles at 1.3 cents apiece so earning 1.2 miles per dollar on deposit per year is equivalent in my view to a 1.56% APR. And of course I can get a lot more value out of the miles than that. American Airlines AAdvantage® miles are the currency I’ve redeemed the most, for premium cabin awards on Etihad; Qantas; Cathay Pacific; Japan Airlines; British Airways and more.
It’s even better on a tax-adjusted basis. Bask Bank did a good job determining how they should be reporting the miles earned as a return on accounts. Bask Bank’s terms and conditions say “[m]iles are currently valued at 0.42 cents per mile, the equivalent of 0.42% annual percentage yield.” So for every 10,000 miles earned on deposits they report a value of $42.
Here’s a simple illustration of how I view the return on a mileage savings account. I see the new mileage earn rate as equivalent to 2.18% interest. However many people value AAdvantage miles more highly than I do, which would make it equivalent to a higher rate of interest than even this. And miles that put you over the top for a specific award are even more valuable still.
| Interest | Mileage | |||
| Savings | Savings | |||
| Avg Balance | 10,000 | 10,000 | ||
| APY | 2.18% | 1.56% | ||
| Annual Return | 217.50 | 156.00 | ||
| Tax @ 35% Rate | 76.13 | 17.64 | ||
| Net Return | 138.44 | 141.30 |
The results aren’t just sensitive to your valuation of miles, they are sensitive to your tax rate – for instance if you have a high income, in a high tax state, the mileage account looks relatively even more attractive.
- Taking The Points Guy website’s 1.77 cents per mile for AAdvantage miles
- And a 51% marginal federal + state + city tax rate
- The new Bask Mileage Savings Account would generate an after-tax return in miles equivalent to a 3.39% APY interest savings account.
I use this account myself as a place to park short-term funds I need for taxes, like for the property taxes on my home. I’m already using the account, so a 20% increase in mileage-earning is especially appreciated. I’ll earn more miles for doing exactly what I already do.
Bask Mileage Savings Account
