Ally Bank sent me an email this week that they were once again dropping their savings account interest rate – this time down to 0.80%.
See I keep my emergency fund (which is 3-6 months of living expenses) in a savings account for peace of mind. I’ve kept it with Ally for the longest time since they offer an easy online savings account with a very good interest rate.
But now I’ve decided to move my emergency fund savings account to Bask Bank. Bask Bank (Dallas, Texas) pays you with American Airline miles as interest instead of cash.
Bask Bank is a division of Texas Capital Bank which is FDIC insured. Bask Bank has had a 20 year relationship with American Airlines.
Like I mentioned above, instead of earning cash interest on your savings, you will be earning American Airline miles.
You will earn one mile for each dollar you save annually. For example if you put $50,000 in the Bask Savings account, after a year you will have earned 50,000 American Airline miles.
Miles are accrued daily and awarded on your average monthly balance. So if you keep $50,000 in for a month (30 days), you will get 4109 miles for that month (50,000 / 365 days per year x 30 days).
Better than Cash
As an example, let’s say you have $70,000 (I know, that’s a large amount, but just go with it). Putting that $70,000 an Ally.com savings account will net you $560 in interest at the end of the year ($70,000 x 0.8%).
Putting that same $70,000 in Bask will net you 70,000 American Airline miles. ThePointsGuy himself values American Airline points at 1.4¢ each, meaning the 70,000 AA points should be worth at least $980.
I am currently booking flights to Bali (for the amazing Travelzoo deals I booked). Checking Google Flights, one-way economy tickets are running ~$658.
So with the $560 in cash I would have earned with the Ally.com savings account. I’d still need another $98 to buy an economy ticket to Bali.
But since Bali is so far away and it’s a looooooooong airplane ride, let’s check the cost of a business class seat with a lie-flat seat. The cheapest one-way business class flight to Bali I could find is currently $2796.
Here’s where having 70,000 American Airline values can get you outsized value. I can use 70,000 American Airline miles for a business class seat to Bali too!
There is actually a lot of availability too.
A $2,796 business class flight – $62 for taxes = $2,734. This yields an amazing 3.9¢ per mile value! ($2734 / 70,000 miles). Much higher than ThePointsGuy’s valuation.
And it’s also 5X the value of the cash you would have earned at Ally.com.
So would you rather fly 30 hours in a tight cramped economy seat where you have to sleep upright?
Or 30 hours in business class with lounge access, lie-flat seats with blankets & pillows, amazing dining, amenity kits, and sometimes even PJs?
If you travel at all, you should definitely consider earning American Airline miles at Bask Bank instead of cash for out sized value.
Want to get started earning American Airline miles with Bask? They have a referral offer going on where they will give you 5000 bonus American Airline miles (on top of interest miles you earn) if you deposit $10,000 in the account for 90 days.