Editor's Note: We have learned that the sign-on bonus, the feedback bonus and the balance bonus, all of which are described below, will continue to be extended to users who register for new accounts through June 30, 2020. These bonuses will no longer be offered after that time. If you have considered opening a Bask Bank account, we would recommend that you register and fund the account before that day. The proposition will remain attractive, but will not include the bonuses after that date.

Ordinarily, it is BestCashCow’s view that consumers, young and old, should keep a certain part of their assets in the highest yielding online savings and online CD accounts that they can find. We also encourage folks to have a look at local savings and local CD rates before they jump into online accounts and those rates can be competitive in certain markets.

It is almost unprecedented that we would provide advice that runs contrary to that recommendation, but this is one of those times.

The basics of a Bask Bank Account

Bask Bank, a new subsidiary of Texas Capital Bank, is offering depositors 1 American Airlines AAdvantage® mile for every dollar kept on deposit for one year. If your account has an average balance of $100,000 in month 1, you will earn 8,300 AAdvantage® miles in that month. If you maintain the same balance in month 2, you will earn 8,300 AAdvantage® miles in that month. And, if you hold that average balance for a full year, you will get 100,000 AAdvantage® miles over the course of the year. The account has no fees and no minimum balances.

The bonuses in a Bask Bank Account

Bask bank is currently giving a 5,000 AAdvantage® mile sign-up bonus for funding an account with $1,000 for 30 days. They will also give you a 1,000 AAdvantage® miles “feedback bonus” for rating the account opening process on their website or mobile app. While that is an easy 6,000 AAdvantage® miles on top of the base miles you earn, it the “Balance Bonuses” that make Bask Bank especially compelling. They are as follows:

• $25,000 held on deposit for one year earns a 10,000 mile bonus,
• $50,000 held on deposit for one year earns a 20,000 mile bonus,
• $100,000 held on deposit for one year earns a 40,000 mile bonus.

According to the terms and conditions, these Balance Bonus are paid semi-annually.

With all bonuses factored in, $50,000 held in Bask Bank for one-year will earn 76,000 AAdvantage® miles and $100,000 held in Bask Bank for one-year will earn 146,000 AAdvantage® miles.

5 Reasons Why this is Attractive

First, the savings rates among well-known online banks is currently between 1.70% and 1.85%. In the best case, $50,000 deposited at 1.85% and held there for one-year (if the rate does not decline further) will generate $925 in fully taxable income. But, we suspect that the Fed may lower rates again in 2020 and you may not even be able to generate the full $925.

Second, even if you get the $925, there is nothing too exciting about $925, especially when that money is fully taxable. It is important not to lose principal, but the interest that you are going to make is $925. $925 on $50,000 just isn’t sexy. By contrast, the 76,000 AAdvantage® miles (or 146,000 AAdvantage® miles if you deposit $100,000) that you could be earning with a Bask Bank account can literally get you places.

Third, American Airlines AAdvantage® miles have real value. In its credit card section, BestCashCow values AAdvantage® miles as easily being worth 1.80 cents each when redeemed for travel on American Airlines. Applying that value, the 76,000 miles are worth $1,368. (We should note here that the IRS too puts a value on these miles, but that value is lower than BestCashCow’s and Bask Bank is going to send you a 1099-INT each year that values the miles at 0.42 cents each).

Fourth, American Airlines AAdvantage® miles have aspirational value. I personally have redeemed American Airlines miles at over a 5 or 6 cent per mile valuation on Business Class seats to Hawaii, London and Madrid. Some friends and family members have found even more valuable redemptions when redeeming AAdvantage® miles on some of American Airlines’ OneWorld partners. While I might not necessarily have taken these trips without the miles, there is real value in the fact that these miles have taken me to places that I might not have gone and in a class of service that I might not have flown.

Fifth, airline miles and loyalty points from major airlines like American are the ultimate “alternative” currency. It is worth noting that American AAdvantage® miles have largely held their value for decades. Management at American (and United and Hyatt for that matter) have realized real value in their loyalty programs, and created an ecosystem in which credit card companies have flourished through offering their currencies. Due to the dependence on these programs, devaluations are likely to be small and incremental. Unlike bitcoin or gold or some other alternative currency, these reserves can make sense. I’ve also redeemed American AAdvantage® miles to avoid the high cost of last minute tickets when personal or business travel has required me to travel immediately, and now that American has removed its $75 close-in ticket fee, this miles are even more valuable for this.

For many years, BestCashCow has strongly encouraged folks who are at all inclined to travel to opt for credit cards with travel rewards programs over cash-back programs. Rather than just be frustrated by falling savings rates, 2020 might be the year to also take airline miles over interest.

First, the good news. In its nearly 15 years, BestCashCow has very seldom had to deal with this issue. As the reviews across the site indicate, most people have outstanding experiences with the major online banks. For the most part, across the last decade and half, customers opening savings accounts and CD accounts at these banks experience outstanding service and find rates that enable them to grow their nest eggs faster through compounding at higher rates.

And, the same is generally true of lesser known local banks and credit unions. While we see reviews that are less than generous every day, the thrust of most complaints across all banks relate to long wait times, slow transfer speeds, small unexpected fees here and there (that are often removed), websites timing out, etc. These complaints rarely relate to banks engaging in tactics designed to nickel and dime customers.

And, we do occasionally grapple with banks purporting both to be online and accepting customers nationally, but that really aren’t either. If we learn that a bank is in fact only equipped to accept new customers in its home area or state, we restrict the listing so that it only appears in those places.

The more challenging determination is when a bank does offer all its online services to customers nationally, but does not treat all its customers fairly or in the manner expected of an online bank, but rather seems to go out of its way to rip them off. On only two occasions have we had to deal with this kind of scenario. And, unfortunately, both of those cases are occurring right now (one is a repeat offender).

The first case is that of Brio Direct. Brio Direct is a recent new entrant in the online banking space and is owned by Sterling National Bank. As we have learned from comments on this bank, Sterling is much maligned in New York for a taxi medallion scheme that it is purported to have engaged in with Michael Cohen to systematically defraud the taxi drivers of New York (and hence the City of New York and the State of New York). More importantly, Brio Direct, according to our site viewers, has a policy of taking large and small deposits and holding them for long periods without interest on both inbound and outbound transfers. Not only is this well documented in comments on BestCashCow, but our employees have also experienced this in their own accounts and have confirmed this questionable policy directly with the bank.

The second case is that on Salem Five Direct, the online banking division of Boston’s Salem Five Cent Bank. Salem Five has been around for some time and years ago engaged in a policy of (a) quietly slipping in undisclosed $6 charges for each outbound ACH transfer, and (b) lowering the interest given to existing customers to a rate that is well below that indicated for new customers online (only to then increase it if the customer contacted the bank to complain). These practices were deemed so deceptive that the Florida Office of Financial Regulation contacted BestCashCow and asked us not to list Salem Five Direct in our online savings tables. While we concurred at the time, we have put them back on our lists years later after the bank committed to us that it had changed these practices. However, a comment left on the site yesterday, that we have verified as being authentic, indicates that both deceptive practices have resumed.

Brio Direct and Salem Five Direct practices are especially troubling as these banks are both offering savings rates that are among the most competitive offered nationally at the moment. It would be easy to remove both banks (Salem Five Direct again) from BestCashCow’s online savings tables. But, that would go against BestCashCow’s mission to provide users with the most comprehensive list of online savings rates in the country. Therefore, we have opted to continue to list these banks, but to alert users of other user experiences with these practices in our online savings table. And, through our user comments, those on BestCashCow can easily learn more about the practices of both banks through customers’ own experiences (both banks are now rated 1 star and there are now over 20 comments about Brio’s practices).

While we have left the listings on BestCashCow, we have, however, now advised our affiliates to remove these listings without adequate disclosures. Some affiliates, including RatesAndInfo.com have chosen not to list these banks’ savings rates, but continue to list their CD rates as long as the practices do not extend to those products. We support such a solution where full disclosure cannot be made.

I often speak to bank executives who are pursuing capital with the goal of bringing in large deposit volumes and who are setting their rate strategies. These folks will tell me that they are trying to avoid “fast cash”. In other words, they do not want depositors that will come only for the rate and leave as soon as they find a higher rate. My advice to these bankers is always that if they want their asset base to be more permanent, they should offer competitive CD rates as well as savings rates, and they should keep their savings rate competitive and not launch a huge campaign to advertise a great rate, only to later quietly lower it to a rate that is not competitive.

My advice to depositors is likewise pretty simple. If you have an online savings account or a local savings account that is not competitive or no longer competitive, you should consider moving your assets to one that is. By regularly checking online rates and local rates at BestCashCow.com, you can ensure that your money is compounding at the highest rate available over time.

In any environment, depositors need to consider the opportunity costs of moving cash from one savings account to another. You will always loose a day or two of interest getting your money out of an account through an ACH transfer, and may lose more if ACH is not available. Then your money may sit at a hub account paying only nominal interest that you hold (like Morgan Stanley or Merrill or Bank of America or Wells Fargo) for a day or two before you can get it transferred again. And, then by the time your money is earning the higher rate, it may no longer be the higher rate.

In a declining rate environment – like the current one – the opportunity costs of moving cash from one account to another may be lower, but you run the risk that the bank that you are moving your money to will shortly be lowering its rates too.

This, in fact, is what happened to me. I held a maturing one-year CD at a major online bank at 2.85% APY. Rather than allow the CD to renew at 2.00% or to keep the principal at that bank earning 1.70%, I decided to move it to a local bank near me that was still paying 2.00% APY on savings. However, by the time I finally got the money deposited in that bank, it had actually lowered its rate below 1.70%, causing me to have to move the money back to the bank where I had held the CD. In the end, I had lost almost a week’s worth of interest.

This strategy, of course, makes sense if you are chasing a higher CD rate and have locked in a rate by beginning the application process before you begin to transfer your money, but it just does not make sense for money that you have allocated to savings only. Read my recent article discussing whether to lock money in short-term CDs here.

The moral of the story here is that you cannot fight falling savings rates, but you sure can lose interest trying.

Think very carefully about your opportunity costs and about the direction of rates generally before you chase a few more basis points at another bank. You are often better off leaving your money where it is.