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I first wrote about the Basque Bank and the Basque savings account in early 2020. I’ve been saving and winning with it for a year, and the mileage strategy has worked for me.
That’s not really a surprise. I have been a customer of Basque Bank’s parent company, Texas Capital Bank, since July 2003. But it’s nice to see that the value proposition remained unchanged during last year’s turmoil and even looks more attractive compared to today’s alternatives.
Coherent and strong value proposition in a changing world
The world is very different from when the Basque Bank was founded. Despite the pandemic, the global recession and the fall in interest rates, the value proposition of the Basque savings account has remained unchanged: For every dollar saved, one AAdvantage® mile is credited to American Airlines. There are no commissions on the account. Earning the same miles as you did a year ago makes even more sense in a world where interest rates are lower than when you started saving.
In addition, American Airlines AAdvantage® miles have retained their value despite the many changes in the industry. While other airlines have changed their prices, American Airlines has maintained its rewards plan. And they have taken a big step toward eliminating mileage redistribution fees. You can book an award ticket, and if you decide to cancel, you can collect your miles for free – just cancel before your first departure.
Although the Basque Bank’s value proposition has remained the same, the miles earned with it have become more flexible. It’s a great way to plan a journey in an uncertain world.
American Airlines first class Airbus A321T
The most transparent tax system I’ve seen in a long time
When I win miles as a prize, the contest sponsor sometimes evaluates those miles based on the total sale price at which the loyalty program sells the miles, even though that’s not the best price a consumer can often get, regardless of how many miles he or she earns. In these cases, I recommend challenging the value in 1099.
On the other hand, the Basque Bank has well defined how to present the miles earned as reimbursement in the accounts. Under the terms of the Basque Bank, it is currently valued at 0.42 cents per mile, which corresponds to an annual interest rate yield of 0.42%. So for every 10,000 miles earned from deposits, a value of $42 was reported.
Now that I have had my Basque savings account for a year, I have received my first 1099-INT form from the bank. Not only do I appreciate their thoughtful approach to estimating mileage for tax purposes, but they are very transparent about it. I don’t recall anyone else claiming extra miles on their tax return.
Obtaining a Bonus for Opening an Account
Something else that hasn’t changed recently is the premium for opening the Bask savings account, which is available until age 30. June 2021: Receive an additional 1,000 miles when you maintain a minimum daily balance of $5,000 for 90 consecutive days within 120 days of account opening.
How to get an above average return by saving with the Basque Bank
Let’s take the example of a $10,000 deposit. If you deposit your account immediately after opening and hold it for one year, you will earn 11,000 miles (10,000 miles per account balance plus 1,000 opening bonus miles).
I valued the American AAdvantage miles at 1.4 cents each. That’s why I think 11,000 miles is worth $154.
On the other hand, if you could earn 0.5% on a competitor’s savings account, it would earn you $50 after a year. In this case, the repayment of the Basque savings account is three times higher.
And it’s even better when you look at the network after taxes. Suppose you are in the 24% federal tax bracket and you live in a state with no income tax. Your net balance in this 0.5% savings account is only $38.
The 1099 you get from Basque Bank for 11,000 miles costs $46.20. Your tax liability for miles in the 24% category is $11.09. Then I believe your net worth is $142.91. That’s almost 3.8 times the return of other hypothetical savings accounts that yield half a percent.
Earn as many miles as you want without spending any money
By accumulating just one mile in your Bask savings account, you avoid having your AAdvantage® miles expire. Choose the amount you wish to deposit and the number of miles you wish to earn. And unlike other ways to earn lots of miles, you don’t have to spend any money to do so. You can top up your account when you need your miles and withdraw them when you want to spend them (new customers can make up to three online transfers per month for a total of $100,000).
My travel expenses have dropped significantly over the past year, and I know this is true for many readers as well. You can put your travel budget into a Bask savings account and earn miles for your trip, while setting aside money to cover expenses other than airfare.
Basque Bank and BankDirect are divisions of Texas Capital Bank, a member of FDIC N.A. All of your deposits at (i) Basque Bank, (ii) BankDirect and (iii) Texas Capital Bank, New York are insured up to $250,000. Depending on how your assets are held, additional guarantees may be available.
The price for opening an account is valid until the 30th day. June 2021 valid. Accounts must be funded within 90 days of opening. AAdvantage® miles will be credited within 10 business days of your eligibility for the offer. It may take 6 to 8 weeks for them to be credited to your AAdvantage® account. The cost of this offering will be reported to the Internal Revenue Service and the recipient will be responsible for any federal, state or local taxes associated with this offering.
More information about thewing
frequently asked questions
Is the Basque Bank legal?
Is the Basque Bank legal? Yes. Basque Bank is a division of Texas Capital Bank N.A., headquartered in Dallas. Texas Capital Bank is a member of the FDIC. Deposits in all Texas Capital Bank financial institutions are therefore insured up to $250,000.
How does the Basque Bank work?
At Basque Bank, you earn one AAdvantage® mile for every dollar you deposit each year. That means you’ll earn 10,000 AAdvantage® miles when you deposit $10,000 into your Basque savings account in one year. We’ll be talking about this value proposition for a while, but it’s worth it.
Is Basque Bank insured by the FDIC?
Basque Bank is a division of Texas Capital Bank, an FDIC-insured bank headquartered in Dallas, Texas. … The total amount of your deposits at (i) Basque Bank, (ii) Bank-Direct and (iii) Texas Capital Bank, New York are insured up to $250,000.
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