You likely know that most banks will have savings accounts and/or high yield interest accounts that you can accrue interest. I recently heard about a bank that will pay you in American Airlines miles instead of cash for the interest. Which would you choose? Cash or airline miles?

If you have had savings accounts you know you will get a 1099 tax form identifying how much interest you accrued that year. You also know that you have to file this form on your tax return in which you have to pay taxes on it. Let’s say you accrued $1000. Great! Just don’t forget you will likely have to pay taxes on it.

Savings accounts that accrue airline miles will give you miles instead of cash. I found a bank called Bask Bank where they offer American Airline miles.

Cash or miles? For me, I love to travel. I don’t like paying for travel though. If I can pay for a trip with points and miles instead of paying in cash, then it’s a win. I could accrue the cash interest and use that to pay for my travel but it just feels better not having to spend the money. Which is the better return?

Both ways accrue interest and both have a dollar value. Even if you are collecting interest in miles those miles are worth some amount of money and you will receive a 1099 for it. Based on my research, the value on those miles should be lower than accruing cash interest. For example, if you have $25,000 earning 4% annually you would earn $1000 in interest. That same 25,000 can earn you over 40,000 miles. The dollar value of 40,000 miles will be less than $1000 according to my research. You’re earning miles towards a flight and paying less interest at tax time. In my opinion, I think that’s the better value.

I’ve seen one way tickets to major cities as low as 8,000 miles. That could be 5 one way flights. Additionally, American Airlines does have a large presence in my surrounding airports. Since I love to travel, I consider this the better value.

I love that there is a bank that pays interest in miles. If you value miles more than cash like I do, you may want to consider a mileage savings account. There is no right or wrong here. Which would you choose? Cash or airline miles? You know my answer. If you are interested in following my journey, email subscribe here to get alerts of latest posts or follow me on Facebook, Instagram, and Pinterest.