Bask Mileage Savings Account Review: Unique Perks, Low APY for Most Savers

For frequent flyers and AAdvantage members, the Bask Mileage Savings Account offers a unique way to earn miles: saving money. Unlike other savings accounts, which pay interest in cash, the Bask Mileage Savings Account will give you 2.5 AAdvantage miles for every $1 saved annually. Below, we'll take a look at what makes this account especially attractive to AAdvantage members and whether it's worth depositing your savings here in this expert review.

The Bask Mileage Savings Account's APY is reflected in AAdvantage Miles -- you earn 2.5 miles per $1 saved every year. If you redeem them for $0.015 per point, it comes to an APY of 3.75%, which isn't the highest available, but it's not bad. Ultimately, earning interest in the form of cash is easier to use for most people, though.

The Bask Mileage Savings Account could be well-suited for frequent AAdvantage members, but there are some drawbacks you need to know. Let's take a look at its strengths and weaknesses.

Top perks

Earn AAdvantage miles instead of cash: If you fly with American Airlines often, this savings account can help you earn trips faster.

No monthly maintenance fees: You won't pay any fees to open a savings account at Bask Bank.

No minimum account balance: Bask Bank doesn't require a minimum balance. However, if your balance stays at $0 for 15 consecutive business days, Bank Bank may choose to close it.

Potential to save on taxes for high-income earners: Interest earned in a savings account is taxable and will be taxed at your marginal tax rate. But the Bask Mileage Savings Account is unique in that it pays you in miles, not cash, which can be puzzling for tax purposes. To make things easy, Bask Bank and the IRS assume each mile is worth $0.0042 and will report it as such on an IRS Form 1099-INT. At that rate, your account hypothetically earns an APY of 1.05%, which is much lower than the account's potential.

For high-income earners, this is where things get interesting. If you're redeeming miles at a 3.75% APY but you're being taxed as if you were earning 1.05%, you could save hundreds on taxes if your tax rate is high.

Let's look at an example. Say you're in the highest tax bracket (37%), you have $60,000 to save, and you're deciding between the Bask Mileage Savings Account and a traditional savings account that has a 5% APY. If you were to choose the account with a 5% APY, you would earn $3,000 annually on interest. At a 37% tax rate, you might incur around $1,110 in taxes on $3,000 earned, leaving you with roughly $1,890.

Saving $60,000 in the Bask Mileage Savings Account would yield 150,000 AAdvantage miles or about $2,250 in value if redeemed for $0.015 per mile. The IRS will tax you as if your exchange rate was $0.0042 per mile, or about $630 in value. At a 37% tax rate, you might incur $233 in taxes on $630 earned in interest. That would leave you with $2,017 -- over $100 more than the high-yield savings account.

If you're in a lower tax bracket, the 5% might be the better option. But do the math if you're a high-income earner, as you might pay less taxes and earn more in the Bask Mileage Savings Account.

Frequent special offers and bonuses for new members: Bask Bank has frequent offers to earn thousands of AAdvantage miles just by opening an account and making a deposit. Check the Bask Mileage Savings Account page for details on current bonuses.

What could be improved

Low APY: Unless you're a high-income earner, the APY on this account isn't competitive compared with other high-yield savings accounts. Your APY depends on how you redeem rewards, but assuming you can get $0.015 for every AAdvantage point, you'll earn about $0.0375 for every dollar you save -- a 3.75% APY.

No debit or ATM cards: This could pose a problem if you're trying to access cash fast. Although you can withdraw from your savings account at any time, you'll have to transfer money to an external account that lets you withdraw it as cash. The transfer could take a few business days -- not exactly ideal if you're facing an emergency.

No physical branches: As an online bank, Bask Bank does not have brick-and-mortar stores.

Bask Bank doesn't have the greatest flexibility when it comes to depositing and withdrawing money. With that in mind, let's look at how you can access money in a Bask Mileage Savings Account.

Deposit options

As an online bank, Bask Bank doesn't accept cash deposits. If you need to deposit money, you're options are limited to the following:

• Electronic funds transfer
• Direct deposit
• Wire transfer
• Mobile check deposit

Withdrawal options

Withdrawing funds from Bask Bank will involve electronic transfers, since it doesn't let you withdraw directly from your savings account at ATMs. If you need to get your hands on cash, here are your options:

• Electronic transfers
• Wire transfer

Bear in mind that Bask Bank imposes transfer limits. For new customers, you can make six transfers per month with a maximum of $150,000 monthly. Established clients are also limited to six transfers monthly, but the maximum monthly allowance is $300,000.

• You are a frequent flyer or an AAdvantage member who wants to earn miles instead of cash.
• You're a high-income earner who can save on taxes by earning miles at a 3.75% APY but paying taxes as if it was 1.05%.
• You don't need ATM cards or physical branches to access your savings.

Keep reading about Bask Bank:

• Bask Interest Savings
• Bask Bank CD

Our savings account methodology

At The Motley Fool Ascent, we rate savings accounts on a five-star scale (1 = poor, 5 = best). We evaluate all savings accounts across four main criteria: annual percentage yield (APY), brand and reputation, fees and minimum requirements, and perks that really make a difference -- think ATM access, linked checking accounts, or even branch access.

Our scores are weighted as:

• APY: 50%
• Brand and reputation: 20%
• Fees and minimums: 15%
• Other perks: 15%

Learn more about how The Motley Fool Ascent rates bank accounts.