32 ms·

Robinhood launches 3% checking account

• ericliuche 8y ago
  They are offering this as a brokerage and not a bank so the accounts are not FDIC insured but SIPC insured instead https://support.robinhood.com/hc/en-us/articles/360001469903 https://support.robinhood.com/hc/en-us/articles/360001469903
  • AustinGrandt 8y ago
    It looks like both FDIC and SIPC have a 250K protection, are there any other differences between the two that would matter to an average consumer?
    • robraven 8y ago
      Does this mean it's not smart to store more than 250k in robinhood? (I don't, just wondering)
      • deleted 8y ago
        [deleted]
      • 1123581321 8y ago
        You shouldn’t store more than $250k in cash in any kind of bank or brokerage due to the insurance limit (unless the bank has account insurance beyond $250k.) Investments are different, of course. Edit: I forgot about the details of the limit. Thank you all.
        • dec0dedab0de 8y ago
          EDIT: According to the link shared by mortenjorck this is incorrect. A banker explained this to me a while ago, and I just took their word for it. I might have to call my mom now. I'll leave this up so that anyone else with the same misconception will know its wrong It's actually per bank, per type of account. So $250k in savings accounts, $250k in checking, $250 in Money Market, etc.
          • mortenjorck 8y ago
            This is incorrect according to the FDIC’s website: > All single accounts owned by the same person at the same bank are added together and insured up to $250,000 Revocable trusts, joint accounts, and other types of accounts with multiple custodians are covered separately, but checking, savings, and so on are not. https://www.fdic.gov/deposit/covered/categories.html https://www.fdic.gov/deposit/covered/categories.html
          • dragonwriter 8y ago
            > It's actually per bank, per type of account. So $250k in savings accounts, $250k in checking, $250 in Money Market, etc. It's not per type of account, it's per ownership category. Ownership categories are: (1) Single accounts (2) Certain self-directed retirement accounts (3) Joint accounts (4) Revocable trust accounts (5) Irrevocable trust accounts (6) Employee benefit (non-self-directed) plan accounts (7) Corporation, partnership, or unicorporated association account (8) Government accounts https://www.fdic.gov/deposit/covered/categories.html https://www.fdic.gov/deposit/covered/categories.html With a little bit of work, you can probably spread your money into a few of those categories without much problem and have more than $250k coverage, but it's not as easy as just having checking and savings.
        • bogomipz 8y ago
          The limit is actually per each ownership category: https://www.fdic.gov/deposit/covered/categories.html https://www.fdic.gov/deposit/covered/categories.html
        • Schweigi 8y ago
          Interactive Brokers introduced a Bank Deposit Sweep Program this year. They distribute cash over 10 banks to provide up to $2.5mio FDIC insurance.
          • whitepoplar 8y ago
            Same with Fidelity's free CMA account.
        • notyourday 8y ago
          Per bank per beneficiary with John Smith POD Jane Smith account being considered different beneficiary than John Smith account.
      • ptero 8y ago
        Brokerages love fat cats and most provide free high quality additional insurance up to at least 5-10M. What happens if brokerage fails? My bet is its insurance, reinsurance or gov't would bail investors out (ask Lehman clients many of whom had accounts a LOT bigger than 250k). My guess is that it is safe to keep at least 5M in a single brokerage, but decide for yourself.
        • crgt 8y ago
          Many Lehman clients got pennies on the dollar..
          • ptero 8y ago
            Can you provide some references? This is an honest question, I am just stunned that this did not cause major account fragmentation (fat cats splitting millions into 500k chunks). Just googling (which, granted, is not truth) seems to point to major news outlets confirming that customer accounts were safe. To clarify, I am talking about customers who held money at LB invested in mutual funds or securities. If the account had a mix M of securities before LB collapsed they would have the same mix once the dust settled and LB account was forced to whatever other brokerage. If this is incorrect (not for some advanced hedge funds, etc. but for retail customers) I would love to know. If you are talking about folks who held LB stock or bonds, they sure did lose money when the company went bankrupt, but that is not unexpected. Stocks fluctuate in price and some go all the way to zero; for every Google there are a few KMarts, Sears or Enrons.
        • jonwachob91 8y ago
          Do you have any links or reading material about what lehman clients were able to pull out?
          • ptero 8y ago
            This came after a quick search, which seems to confirm that if a client had, say, 100 shares of Amazon in a brokerage account at LB he would still have those: a brokerage must separate retail customers investments in other securities from its own money and funds. https://www.kiplinger.com/article/investing/T023-C000-S001-what-happens-to-lehman-s-customers.html https://www.kiplinger.com/article/investing/T023-C000-S001-w... However, reading more I am not as sure that individual investors holding money in LB investing in other (non-LB) securities did not suffer. I am not an expert and cannot always distinguish between reputable sources and conspiracy theorists. Can someone provide some good references?
    • ptero 8y ago
      IANAL, but I doubt FDIC vs SIPC matters for an average consumer. If either fails it would almost certainly cause a major run on banks and/or a systemic money transfers failure. Thus it is much cheaper for the gov't to print more money than suffer such consequences. And if the gov't really wanted to weasel out of FDIC there are plenty of loopholes. For example, I think FDIC can take a long time (up to 10 years?) to pay and is not adjusted for inflation, so inflate, wait and pay pre-inflate amounts is an option (stupid, but technically possible).
    • siftikha 8y ago
      SIPC covers 500k in (non-exempt) assets with a max of 250k of those assets as cash.
    • snowwrestler 8y ago
      Maybe: > SIPC insurance provides protection for your cash balance and securities holdings if Robinhood fails financially, but does not cover investment losses due to declines in the value of securities themselves. Emphasis mine. If you put $250,000 into an FDIC-protected checking account, that account holds cash and FDIC protects the full amount of that cash. If you put $250,000 in an SIPC-protected brokerage account, that account holds both cash and securities, and SIPC does not protect you from a decline in the market value of those securities. So imagine the stock market drops and you go to your "checking account" and that has dropped too! To me, the concept of such a "checking account" violates my basic assumptions of how I think about my cash holdings vs. my security holdings. I don't know how that percentage of cash/securities breaks down at Robinhood, but it's not going to be 100% cash and 0% securities. There is a reason big banks don't offer checking accounts with 3% interest rates. When the return is higher, the risk must have gone up too, somehow. It also seems like there could be weird tax implications if your "checking account" has to liquidate securities to cover a big check you wrote.
      • mcv 8y ago
        What are securities in this context? Is that not something that you personally choose to invest in? Because if it is, then this is basically the same. Your cash is fully insured, but obviously your investments run investment risk. If Robinhood automatically converts your money into securities, then it's a different matter. It sounds unlikely to me that any bank account would work that way, but I don't know how Robinhood works.
        • 09bjb 8y ago
          Not an expert in this domain but I'll cover the basics: ecurities are a euphemism for stocks and similar. Banks have been loaning out the money you deposit since the beginning of time; it's how they make money. They don't keep all the cash that people have deposited on hand, which is why a "run on the bank" was problematic in the past. They basically keep enough cash around ("reserves") so that the average withdrawals don't get them into trouble. And yes, you are certainly not choosing the investments that the bank makes with your money. And they're not "your" investments: the bank pays you a small fee (3% in this case) and then takes risks with your money to make a higher return and keep the difference. I'd recommend reading up on the Federal Reserve (The Creature from Jekyll Island), the modern financial system (any of Michael Lewis's books, especially Boomerang and The Big Short), and maybe the first global banking families (The Medicis: Power, Money, and Ambition in the Italian Renaissance). We're talking about the power structure of the world here and it's good to be informed on the main points.
    • nitsuaeekcm 8y ago
      Banks who petition the Fed for FDIC insurance face much stricter reporting rules, capital reserve requirements, and limits on the riskiness investments they can make with client deposits from FINRA and the SEC. If you wanted, you could view the lack of FDIC insurance as a sign of a riskier institution overall, but like any other investment it might be worth it for the higher rate.
      • arminiusreturns 8y ago
        Just FYI, AFAIK, the standard 10 percent fractional reserve rate is no longer law after legislation post 08 crash bankers slipped through. So that old rule is very often not the case at a bank anymore.
    • cjensen 8y ago
      The FDIC is part of the government and the government owns a printing press. You WILL get your money back. No private insurance company can provide such guarantees and keep then if the entire sector needs to be bailed out at the same time.
      • hn_throwaway_99 8y ago
        I don't understand this. SIPC is a federally-mandated corporation, not a private insurance company.
        • cjensen 8y ago
          Right. They don't have the same level of commitment from the US government. SIPC is like Fannie Mae, where the US implies a backing without making a promise. When push comes to shove the US Government gets to choose whether to do a bailout on a case-by-case basis. FDIC is not like that at all. The US explicitly and unconditionally backs them. Look at it in political terms. FDIC is guaranteeing everyone's savings, rich or poor. You just can't let that fail. SIPC is guaranteeing a bunch of investments. If the class in power takes a dim view of bailing out a bunch of "wealthy speculators", the ball can definitely be dropped.
  • SnowingXIV 8y ago
    That's pretty standard for a lot of these new-tech-wave style brokerage psuedo-banks. Betterment, Wealthfront, etc which also have a form of savings accounts (don't believe they offer checking accounts like rh is doing here) are SIPC only as well.
    • elithrar 8y ago
      Wealthfront doesn’t offer a “savings” account. Betterment has their Smart Saver[1], which offers a 2.09% rate and attempts to position it as vastly better than FDIC-insured accounts by comparing to some terrible “national average” instead of the ~2% rates that Ally, Capital One & others offer. It’s still an investment account with the risk, tax implications & liquidity challenges that such an account has. Their misleading marketing around this is driving me away from them. [1]: https://www.google.com/amp/s/www.betterment.com/resources/short-term-investing-savings-account-alternative/amp/ https://www.google.com/amp/s/www.betterment.com/resources/sh...
      • SnowingXIV 8y ago
        Yeah, most of these firms use pretty bad metric comparisons for their marketing efforts to inflate how much better it is when in reality it's par for the course with Ally and others. Now that doesn't mean it's bad. Having used it there aren't that many challenges (I'd argue less because information is clear and the interface is nice to work with) and it's all bonds and the risk is low. Unless you have an argument bonds are risky compared to cash sitting against inflation. It's still all SIPC insured. > Smart Saver’s built-in portfolio is the Betterment Portfolio Strategy’s allocation at 0% stocks, 100% bonds. The one big downside could be is if you need cash _now_ it can take a few days (5?) before being able to use it.
      • eeeeeeeeeeeee 8y ago
        Yep, I use Bettement for index funds and their “smart saver” idea is absolute trash. It’s a shady marketing term that is likely going to hurt a lot of people eventually. I don’t even really understand the appeal when most high yield savings accounts give you 2% now (I use Amex FSB).
  • krn 8y ago
    Is it possible, that Robinhood is using high interest rate checking accounts not to make any money directly from them, but to encourage people to keep all their spare money one-click away from its investment products? In that case, checking accounts become just a business cost to Robinhood.
    • cobookman 8y ago
      Or they use said money to buy bonds and/or start offering mortgages...etc.
    • drharby 8y ago
      I feel likr thats implied
    • jpmoyn 8y ago
      Well like any bank they are investing the money held with them.
    • davidlee1435 8y ago
      > to make any money directly from them > to encourage people to keep all their spare money one-click away from its investment products These are not mutually exclusive. Robinhood could write this off as CAC that's mitigated by investments into (relatively) safe and low-yield investments. Robinhood could spend a million on Google/FB ads, or they could have an X% chance of losing an amount equal to (3%-bond yield) where X is reasonably low. The (mitigated) loss gives them access to capital and access to customers. If the 3% is permanent, there is no reason for anyone to store their money in a different checking account, as inflation will eat into their savings if those savings aren't invested. Extremely smart move on their part.
    • snowwrestler 8y ago
      Checking accounts are loss leaders for most banks, even with low interest rates. And big brokerages have offered this type of account for decades. It's usually called a "cash management account" and works just like a checking account--takes direct deposit, provides checks and an ATM card, etc. Robinhood's innovation might simply be in calling it a "checking account" so the interest rate looks huge (it's actually small compared to expected investing returns) and marketing it to young people who are suspicious of big financial companies.
  • bogomipz 8y ago
    Why does this distinction matter if that coverage amount for cash is the same for both FDIC and SIPC?
    • __derek__ 8y ago
      Because the coverage is not the same.
  • klochner 8y ago
    In an email to Barron’s the head of the SIPC cast doubt on the idea that it would insure checking or savings accounts. “SIPC protects cash that is deposited with a brokerage firm for one limited purpose...the purpose of purchasing securities,” wrote Stephen P. Harbeck, the president and CEO of SIPC. “Cash deposited for other reasons would not be protected.” https://www.barrons.com/articles/robinhood-app-is-offering-a-3-interest-rate-to-take-on-the-banks-51544723146?mod=bol-social-tw https://www.barrons.com/articles/robinhood-app-is-offering-a...
• myroon5 8y ago
  "Robinhood expects to turn a profit thanks to a lean 300-employee operation, earning a margin on investing your money in US treasuries, and a revenue share with Mastercard on interchange fees charged to merchants when you swipe"
• JohnJamesRambo 8y ago
  Sorry if this is ignorant but how does the ATM system for this work? Who owns the ATMs at Target and 7-11? Is there a limit to how much cash you can deposit? I'd like to use this but I will be processing a lot of cash in the future and worry about depositing thousands of dollars at an ATM.
  • wonderofworld 8y ago
    ATM is reimbursement based. Very much how shared branching with credit unions work.
    • deleted 8y ago
      [deleted]
  • sct202 8y ago
    They're probably partnering with Cardtronics (which includes Allpoint) which has a really wide ATM network, partially owned and partially thru partnerships with other banks, credit unions, etc.
  • ceejayoz 8y ago
    I use Simple, which is similarly online-only. They recommend depositing cash by getting a money order, which you can deposit via online check deposit by taking a picture of it. I doubt the ATMs at Target/7-11 can take cash deposits. I've only seen that feature on bank branch ATMs.
    • JohnJamesRambo 8y ago
      Wow that's a bummer.
      • ceejayoz 8y ago
        It'd be non-starter if I was, say, a landscaper and often received cash payments from clients. I've had no trouble personally going basically cash-free. If someone gives me cash for some reason, I just buy the next grocery run with it to use it up.
• russell_h 8y ago
  Is it FDIC insured?
  • zaroth 8y ago
    It has to be by law.
    • EpicEng 8y ago
      Well no it doesn't and no it's not.
  • wonderofworld 8y ago
    yes.
    • EpicEng 8y ago
      Why people attempt to answer a question when they don't have a clue is beyond me.
  • deleted 8y ago
    [deleted]
  • ryanbertrand 8y ago
    There was a mention of a partnership with Sutton bank based in Ohio. I’m sure that’s where the FDIC insurance comes from.
  • codeulike 8y ago
    They aren't part of FDIC but they have SIPC insurance https://support.robinhood.com/hc/en-us/articles/360001469903 https://support.robinhood.com/hc/en-us/articles/360001469903 Is my money insured? Your cash in Robinhood is insured up to $250,000 by the Securities Investor Protection Corporation (SIPC). SIPC protects cash deposits in your account in the unlikely event that Robinhood fails. Up to what amount? SIPC insurance covers your checking, savings and investments. Your cash and securities in Robinhood are protected up to a total of $500,000 by the SIPC, $250,000 of which can be in cash, the rest in securities. SIPC insurance provides protection for your cash balance and securities holdings if Robinhood fails financially, but does not cover investment losses due to declines in the value of securities themselves. Is this different from bank insurance? Similar to FDIC insurance, SIPC protects cash in your account if the financial firm fails. FDIC insurance covers deposits in FDIC-insured federal banks. SIPC insurance covers cash and securities at SIPC-member brokerage firms. Robinhood Securities, LLC is a member of SIPC. Additional information can be found at sipc.org.
• dublidu 8y ago
  I’m not sure why other banks haven’t followed. One month treasury rate is already up to 2.3% now and banks can certainly lend it out at higher than treasury rate.
  • freehunter 8y ago
    Because there is basically no competition. Plenty of credit unions around my area offer 3% or sometimes 4% checking, but the best bank rate I could find was under 1%. But credit unions and especially new small players like Robinhood aren't going to threaten PNC or BoA or Chase. So why would they give up free money if they don't have to?
    • subhro 8y ago
      Which credit union offers 4% on all money with them? I know of a few CUs that will offer much higher interest on the first X dollars. Ex: inspiruscu.org
      • ac29 8y ago
        There is usually a cap on those high interest rates - at my CU, its $25k. They pay 2% though, not 4% - it used to be a pretty good deal, but these days its easy to get a money market fund elsewhere that pays more than that with no maximum.
        • subhro 8y ago
          Mind sharing the name of your CU?
      • deadmik3 8y ago
        Yeah when I started looking at one of my local credit unions I almost jumped at the 10% interest rate before I realized it was only 10% on the first $1k then less than 1% on everything after that
        • 8y ago
• SEJeff 8y ago
  As a user of the Robinhood brokerage for all of my "fun investment money" I'm a fan of this. I do wonder how the big banks are going to respond however as this is blatantly a "shots fired" kind of event.
  • davio 8y ago
    BOA interest rates will probably rocket up from .02% to .03% when the prime rate goes above 6%
    • fizgig 8y ago
      I know, right? I'm soooo tempted to hoard $100k with BoA for that 20% extra bonus to their crappy interest rate.
      • tanderson92 8y ago
        You joke, but a lot of savvy people hoard $100k with BoA through their brokerage in the form of ETFs specifically for the bonuses to credit card rates (and the free equity trades).
        • fizgig 8y ago
          Yeah, I know. I'll probably roll over my 401k into an IRA at Merrill Edge for the free trades and 75% perk on their cash back cards. I was just highlighting the horrible rates that banks currently provide in the customer's favor even if you are a loyal patron holding a substantial (for the vast majority of people) sum of money.
  • elliekelly 8y ago
    Oddly enough I suspect the result will be lobbying for stricter financial privacy regulations. Almost half of Robinhood's revenue is from selling data.[1] Big banks won't be able to compete on that front and most of the big players don't participate/make enough money on order flow sales that they'd miss it if it were prohibited. So the banks will do what they do best: lobby congress & regulators to legislate & regulate their competition away. Though in this case, I would argue that's in the best interest of the consumer. [1]https://www.bloomberg.com/news/articles/2018-10-15/robinhood-gets-almost-half-its-revenue-in-controversial-bargain-with-high-speed-traders https://www.bloomberg.com/news/articles/2018-10-15/robinhood...
• mrfusion 8y ago
  Will the 3% be a long term thing or is it just a sign up gimmick?
  • zaroth 8y ago
    The only fine print at the bottom of their signup page simple says; “Users of Robinhood Checking and Savings earn 3% interest annually on each of their Checking and Savings balances.” I would have thought a more precise disclosure would be required. But it certainly does not say anything about fixed, guaranteed, etc. Presumably when you get to actually creating an account there will be more specific terms which must allow them to adjust the rate in the future. But it does not seem to be a kind of “teaser” rate. It seems like, I’m guessing, that everyone with a Robinhood Checking account will get the same rate, if they change it in the future it would be a product-wide adjustment.
    • everybodyknows 8y ago
      More fine print elsewhere: https://checking.robinhood.com https://checking.robinhood.com >Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account. This enables shifting of revenue from other fees to help support the 3% rate.
  • novaRom 8y ago
    Most banks in Europe do similar promos, but promo rates are 10x-100x lower, and normal rates rarely exceed 0.1% on saving accounts. Promo rates do typically last 3-6 Months and only for new customers.
• vthallam 8y ago
  Link to their blog post instead - https://blog.robinhood.com/news/2018/12/13/introducing-robinhood-checking-amp-savings https://blog.robinhood.com/news/2018/12/13/introducing-robin...
  • ikeboy 8y ago
    >With Robinhood, you’ll earn 3% on your money in both Checking & Savings, and interest compounds and is paid out daily. That’s an extra $240 a year for the average American household with $8,000 in the bank Does not compute. If it compounds daily then yearly total is above 3%
    • tedd4u 8y ago
      Maybe it's a daily interest rate of 1.03^(1/365)-1 ?
    • rexaliquid 8y ago
      It's standard to talk in annualized interest rates to make simple comparisons between accounts. A daily interest rate of 0.008 % will compound up to just over 3 % of effective annual rate.
      • ikeboy 8y ago
        If the daily interest rate is 0.008 then the annualized rate is 2.92%, not 3%. The standard is to multiply by the number of periods, not to take compounding into the calculation.
        • talltimtom 8y ago
          Why would the standard be to calculate a number that has no use and isn’t rooted in reality? If the rate is 3% annually and paid out daily, the the daily rate is the number that compounded yields 3% annually....
          • ikeboy 8y ago
• picodguyo 8y ago
  This is higher than even most long-term CDs at the moment. Anyone have thoughts on how this is possible? Possibly a teaser that will adjust down soon?
  • novaRom 8y ago
    It's not fixed. Right now it is 3%, but may fall or rise anytime as much as they decide (or how market and competition will decide).
  • Novashi 8y ago
    Might be some companies really wanting to know what high rollers on Robinhood are buying. Could be a bit of both.
    • GuiA 8y ago
      This seems very likely. Robin Hood users seem to tend towards young and educated, so I imagine the transaction data would be a goldmine.
      • spyspy 8y ago
        Is it? I'd expect anyone educated enough to actively trade with robinhood is not using a debit card for ordinary spending.
        • GuiA 8y ago
          This is purely anecdotal from e.g. the finance subreddits/websites I read, but Robin Hood seems to be the first trading experience for a lot of its users (likely because the mobile experience is so seamless compared to something like ETrade). I meant educated as in "holds a higher education degree", not necessarily in the way of trading.
        • brewdad 8y ago
          True. I use a credit card for almost every purchase I make in order to rack up the rewards points/dollars. My debit card only gets used at the ATM for times I need cash. In the past year, I think I've used my debit card for one purchase at a local small business where my purchase amount was under $10 but I didn't have any cash on me. I wanted to ensure the business didn't lose money after the swipe fees, so I used my debit card and PIN.
• nemo44x 8y ago
  This is great to see. It's even better than the current 1-year CD's I've seen for 1 year. And since this is a checking/savings account there's no time aspect to locking up your cash. If my bank can't compete with this then I will be moving some cash savings into a new Robinhood account.
• FfejL 8y ago
  While 3% is a good deal, there have been internet-only banks for quite some time now, all of whom look pretty much like this. Radius and Axos are two examples that have been around for a while.
  • laken 8y ago
    It's not very common on checking accounts though, even for online banks. 3% interest on online savings though is a different story!
    • mikeash 8y ago
      Is it really? I search for the best interest rates on savings accounts fairly regularly and I haven’t seen 3% since the Great Recession. Radius only offers 2.05% and Axos a mere 1.3%. A quick survey reveals a handful of places offering 2.25%, and I don’t see anything higher.
  • exabrial 8y ago
    Radius: > Earn up to 2.05% APY on balances of $25,000 & up and meet your savings goals faster. Don’t quite have $25,000? Radius High-Yield Savings still earns 1.50% APY on balances of $2,500 to $24,999.99.
  • exabrial 8y ago
    Axos: Up to 1.25% APY. No maintenance fees. No non-sufficient fund fees. No minimum balance requirements.
• kin 8y ago
  Unless I'm completely ignorant of what's out there, 3% interest on a free personal checking account is absolutely bonkers. I can only imagine everyone in /r/churning jumping on this if they have an invite.
  • trq_ 8y ago
    I guess I'm a bit naive, why is this?
    • MrL567 8y ago
      Interest rates for banking accounts for quite some time have been low. 3% is very high for the USA so it' s a pleasant surprise for many people.
      • novaRom 8y ago
        Also 3% is astronomical for Euro zone. Here you typically have 0.01-0.1% on saving accounts (only for 100k Euro and below), and negative rate on checking accounts (most people usually pay 7-12 Euro per month for checking accounts and 20-40 Euro per year for Visa card).
        • zeroname 8y ago
          ...which is appropriate when "risk-free" government bonds hover near zero percent. The US 10-year is on the other hand is near 3%.
        • hocuspocus 8y ago
          It's not a fair comparison. Interest rates have bounced back (to some extent) and interchange fees are quite a bit higher in the US. I haven't checked everywhere in the eurozone but a lot of major banks have online brands/products that are typically free. You should be able to have at least a checking account and a debit card without paying any fees. "Neobanks" are also a lot more developed than in the US: see N26, Revolut, Ferratum, ... Savings accounts yield nothing, but that has nothing to do with retail banks :) That said, you can find fixed-term deposits between 1 and 2%: https://www.raisin.com/ https://www.raisin.com/
• tooltalk 8y ago
  I've using their brokerage services -- no fee on stock and option trading -- and I'm ready to move my primary ETrade account to Robinhood soon. Capital One currently offers 5-yr CD for 3.15%. I just signed up for Citi Priority to save a few pennies on "foreign transaction fees," but it pays paltry 0.03%. That 3% sounds to good to be true, but it's probably not impossible.
  • suddenstutter 8y ago
    Its not too good to be true. These are simply the effects of true non crony capitalism at work. Decentralisation of everything is forcing the crony status quo capitalistic system to change, thus pushing the boundaries of progress further than before. This is simply the beginning.
    • toomuchtodo 8y ago
      Until Robinhood exhausts its runway, is acquired by a traditional finance firm, or is run out of business by FINRA complaints because they kill options trading for hours at a time for their users during market hours [1]. [1] https://i.imgur.com/VTZifUQ.png https://i.imgur.com/VTZifUQ.png
      • adrr 8y ago
        Best was when they exercised out of the money expiring options. I wonder how much they lost on that.
  • deleted 8y ago
    [deleted]
• philfrasty 8y ago
  Anyone know of similar (short term) rates over here in Europe? Gotta be lucky to snatch up 1% for the first 6 months after signing up...
  • sfarhat 8y ago
    Also looking for something similar to Robinhood in Europe
    • marvel_boy 8y ago
      FreeTrade in UK is mostly the same. By the way, the transaction is not always free: it is only free of commission if the operation is delayed until 4 PM (when all batched operations of multiple customers are processed).
  • ig1 8y ago
    https://www.raisin.com/ https://www.raisin.com/
• apo 8y ago
  3% on checking sounds too good to be true. What's the catch? For example, I didn't see anything about how funds are insured. If Robinhood were to somehow lose depositor funds, what recourse would account holders have?
  • elliekelly 8y ago
    Like all "tech" companies - they're selling your data. They already do it in their brokerage accounts. Now imagine the value of knowing what you spend every single dollar on, how often you're shopping at a competitor, what time of day you're most likely to swipe your card, etc. They're SIPC insured (like a brokerge account) instead of FDIC insured (like a bank account) which is a subtle difference and ever-so-slightly riskier for the consumer but not terribly different.[1] The biggest/riskiest difference is that the insurance here is provided by a group-funded non-profit as opposed to the federal government. But mostly it's about making up the difference with your data. [1]https://www.schwabmoneywise.com/public/moneywise/essentials/understanding_fdic_and_sipc_insurance https://www.schwabmoneywise.com/public/moneywise/essentials/...
    • soared 8y ago
      All your credit card companies do the same.
      • elliekelly 8y ago
        Not like this. American Express might have paid marketing "partnerships" but Robinhood is taking it the next level. The Gramm-Leach-Bliley Act requires "financial institutions" to give customers the opportunity to opt-out of information sharing with third-parties. GLBA doesn't permit customers to opt-out of information sharing with affiliates. Tucked on the second page of Robinhood's privacy notice[1] (which is curiously absent from their "disclosures" webpage) you'll see they have an affiliate "Chronos Research." [1]https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal/RHF%20Privacy%20and%20Security.pdf https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...
• ccwilson10 8y ago
  In case people don’t have the direct link to sign up : Edit: referral link, but no real benefit (i.e. monetary) to me for posting it. https://share.robinhood.com/cs-chasew284 https://share.robinhood.com/cs-chasew284
  • ifoundthetao 8y ago
    You might want to disclose that this is a referral link.
• iandanforth 8y ago
  Maybe I'm doing it wrong but the "no foreign transaction fees" is just as exciting. Using my BofA card on trips always results in a welcome home set of charges I could do without.
  • deleted 8y ago
    [deleted]
  • lotsofpulp 8y ago
    Charles Schwab checking account has offered free ATM withdrawal worldwide for a long time.
    • umeshunni 8y ago
      As does Fidelity
    • AshleyGrant 8y ago
      Happy Charles Schwab customer of over 10 years here. I've never once paid a fee on my checking account. Heck, one time I forgot about a one-time bill that caused me to overdraft (first overdraft since around 2005). Instead of charging me the overdraft fee, they sent me an email asking me to make sure the money was in the account by Monday (email received on Thursday) and there would be no fees charged. I'll be staying a Schwab customer.
    • lavezzi 8y ago
      This isn't the same though. The wording is transaction fees, not ATM fees. It's far more convenient to pay with your card where possible rather than tracking down a foreign atm that you can use.
  • ac29 8y ago
    > Maybe I'm doing it wrong [...] Using my BofA card I think I've spotted the problem. Seriously though, look into your available local Credit Unions. There are plenty of good credit cards with no foreign transaction fees as well (some of which are from larger banks).
  • 8y ago
• OldSchoolJohnny 8y ago
  The flour company?
• awinder 8y ago
  M1 has a checking/savings account coming in 2019 Q1, so this seems to be getting into the territory of tablestakes rather quickly. I'm kinda ready to say good riddance to my brick-and-mortar bank, other than maybe maintaining it at a low level for any in-branch needs (and as a source to transfer into robinhood). (https://old.reddit.com/r/M1Finance/comments/9hk0dc/m1_team_ama_101118_1pm_cst/ https://old.reddit.com/r/M1Finance/comments/9hk0dc/m1_team_a... has some light details on the M1 banking product for anyone interested)
• danvoell 8y ago
  They are paying more than treasury rates, aside from the 30 year.
• anoncoward111 8y ago
  Robinhood has a horrible track-record for support. People routinely have their money stuck in Robinhood with no response from support. Cannot recommend using them.
  • everybodyknows 8y ago
    Exactly. "Lean 300-person staff ..."
    • anoncoward111 8y ago
      Crazy. The current organization I work for has easily over 1000 people customer support agents working 24/7. Large home heating oil provider in the US. Most calls are "where's the driver" and has honestly been partially automated but older clients still like to call. Either way, it takes humans to make sure the 600k customers don't fall through the cracks.
• y-c-o-m-b 8y ago
  There is a wait-list of more than 45,000 people when you sign up for the checking. An email is sent out after you register and it says the feature arrives in early 2019.
  • kevin_thibedeau 8y ago
    But they're claiming each card design is in "limited" supply with ~650K each. Something doesn't make sense there. If they can't process 45K signups why have 3M cards up for grabs?
    • bitxbitxbitcoin 8y ago
      Because plastic is cheap!
  • bitxbitxbitcoin 8y ago
    It's at over 200k now.
• Havoc 8y ago
  For those not aware of it: ton of people lost money yesterday because RH options trading system shat itself. I wouldn't trust them with my beer money https://old.reddit.com/r/wallstreetbets/comments/a5iwgh/robinhood_options_fat_finger_glitchbug_thread/ https://old.reddit.com/r/wallstreetbets/comments/a5iwgh/robi...
  • driverdan 8y ago
    This needs to be much higher up. They may be facing lawsuits if they don't fix this. Looks like people lost significant money.
    • camjohnson26 8y ago
      wallstreetbets is basically roulette. It's not good that people lost money through the glitch but most of these people have incredibly high risk positions. Posts like this are common: https://old.reddit.com/r/wallstreetbets/comments/9rrug5/please_risk_management_dont_be_like_me_409/ https://old.reddit.com/r/wallstreetbets/comments/9rrug5/plea...
      • Havoc 8y ago
        >wallstreetbets is basically roulette. Perhaps. Entirely irrelevant though for the topic at hand. The broker needs to execute instructions reliable. Doesn't matter how retarded the thinking behind the instructions is
  • superfrank 8y ago
    Robinhood definitely had down time yesterday, but I'd like to make a note that /r/Robinhood overreacts to things like crazy. I'm pretty sure 95% of the people in there are under 20 and daytrading options with less than $5000. I'm bringing this up because, while some people did lose money yesterday because of Robinhood's downtime, there we also a lot of people claiming to have lost money, but were blatantly lying. I'm not trying to let RH off the hook, but /r/robinhood makes it sound like RH was robbing them at gun point.
• a13n 8y ago
  This is massive news. Banks are going to have to decide whether they want to raise their rates to compete, or face bleeding customers. The best part is that the money comes from merchants and credit card companies, and is being returned to consumers. Robinhood truly is living up to their name: stealing from the rich and giving to the poor.
  • abhiminator 8y ago
    >Banks are going to have to decide whether they want to raise their rates to compete, or face bleeding customers. I'm sure the big boy banks are here stay. Most of them are in the category of, "too big to fail" (as the crisis a decade ago highlighted) and upstarts like Robinhood are but a blip-in-the-radar than a real threat to the established players, imo.
    • talltimtom 8y ago
      To big to fail doesn’t really protect them if they lose their costumers. A bank with tons of customers that’s bleeding cash due to a market crash is salvageable(and remember the investment in bailing them out payed off), a bank that’s bleeding cash because it doesn’t have any customers is not salvageable and no longer “big”, so it will fail.
      • dunpeal 8y ago
        > To big to fail doesn’t really protect them if they lose their costumers. In fact, if they lose their customers they will no longer be "too big to fail".
    • bduerst 8y ago
      Yeah, there aren't many small players since everything consolidated in the early 2000s. RH likely won't sustain this interest rate, and it's more akin to a temporary promotional play to acquire new traders.
    • hbosch 8y ago
      Also consumer checking accounts aren’t really that important to bigger banks or even bigger credit unions. Banks own a large portion of property that doesn’t fall into a checking account. For instance if you own a home and pay a mortgage to Wells Fargo, they control a far greater amount of your wealth than whoever you bank with. Also, business banking and loans in general will never be something that happens on an Robinhood. At least not in this generation. These types of entities require a man in a suit in an office.
• patio11 8y ago
  For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that was hit a few years ago) and debit card interchange. Robinhood also likely expects to not become the park-your-money account of choice for older dentists but rather to become the spend-your-money account for their millennial userbase. With high velocity of money and low balances the interest expense is minimal and, to the extent they use debit cards, the interchange revenue can be material. (In a stylized example where someone makes $2k a month and spends $200 on debit card purchases and $1.8k on rent/etc the interest cost for the year is ~$30 and the debit card interchange for the year is ~$60, even ignoring potential interest revenue.) This is roughly in the same line as their core strategy, which is spending what would otherwise be a marketing budget on keeping commissions at zero, making money on the other ways brokerages make money. If you do not understand how a brokerage makes money, I encourage you to peruse the annual reports of e.g. eTrade or TD Ameritrade, which will happily explain their revenue sources and why commissions are a surprisingly small portion. Metacomment: geeks who believe they have outmathed a financial firm should ask themselves "Are financial firms likely to be bad at math?" and "Are financial firms incapable of hiring their own geeks?"
  • dudul 8y ago
    Just to add a 3rd question to balance the other two: "Are financial firms able to change the way they've operated for decades (centuries?) easily?"
    • cascom 8y ago
      my experience with this is that its not whether they are able to - but the cost benefit of abandoning legacy service lines that are still hugely profitable but maybe not be growing (or actually shrinking)
    • delecti 8y ago
      Your question seems to be implying that you believe financial firms are more stupid than greedy. In contrast to Hanlon's razor, I think it's usually fair to assume greed over stupidity.
• Arubis 8y ago
  For all the folks suggesting that this is funded by selling your data: is there reason to expect that other banks with lower rates aren’t also selling your data? They may be less technically apt, but banks aren’t usually ones to leave money on the table.
• dawhizkid 8y ago
  I actually like the newish Sofi Money debit card. It offers 2% for checking (so not as good but better than any other checking account at the moment), but the real benefit to me is unlimited ATM fee rebates at any ATM worldwide (which doesn't seem to be true of RH's product).
  • Arubis 8y ago
    If you're so inclined, the Schwab Investor Checking accounts offer the same benefit.
    • copperx 8y ago
      Not the 2% interest. Nope.
• durkie 8y ago
  PSA: those using Robinhood for trading, they use the FIFO/first-in-first-out method for determining your cost basis when you sell. This can have unexpected tax consequences. https://support.robinhood.com/hc/en-us/articles/360001226966 https://support.robinhood.com/hc/en-us/articles/360001226966
  • Glyptodon 8y ago
    As someone with limited investment experience, what's a more normal strategy? Highest cost basis first? What are the pros/cons?
    • curiouscats 8y ago
      Any I have seen allow you to set what you want as the default for your sales and also chose to use a different style on each sale. Default setting for accounts I have seen is selling high cost first (as that will result in the lowest taxes). Selling high cost first is likely the best strategy but if say you had some that was long term versus short term capital gain that might lead you to make a different decision on a particular case. Also if you had a choice to sell something that is about to be a long term gain versus one that you bought much more recently you might want to sell the more recent purchase first (in the event you were going to sell again say in a month - which could let you claim a long term gain for the 2nd sale). So there are reasons to make different choices in individual cases.
• deleted 8y ago
  [deleted]
• latchkey 8y ago
  I can get ~8% APY on VND in Vietnamese bank accounts with a time deposit of around 6-12 months. This sounds wonderful until you realize... Inflation is around 4% [1], the account is only insured up to about $3500 (if you are lucky) and VND keeps deflating in value against USD. Never mind the US tax filings take another chunk. There is always a catch. [1] https://tradingeconomics.com/vietnam/inflation-cpi https://tradingeconomics.com/vietnam/inflation-cpi
• calimac 8y ago
  What is their burn rate at 3%?
• dixie_land 8y ago
  I think folks are overthinking this. The math itself doesn't matter. Have you seen recent Robinhood commercials popping up on TV? Their whole business is to encourage folks that should not be day trading to day trade. Having your money parked there just facilitates knee-jerk-reaction and follow-the-crowd trading.
  • deleted 8y ago
    [deleted]
  • JumpCrisscross 8y ago
    > Their whole business is to encourage folks that should not be day trading to day trade Less cynically, it’s building a book of investors who have likely never lost money in the stock market.
    • rconti 8y ago
      It doesn't really matter; they're making the spread anyway, whether you make money or lose money.
    • HenryBemis 8y ago
      Or Forex market. With carefuul activity Forex can make an 'easy' 20% per year. Stocks I would assume would give a 7-10%. Knowing that RH gambles your money, it gives them plenty of profit :)
      • deleted 8y ago
        [deleted]
  • kypro 8y ago
    From what I understand Robinhood ban people who day trade.
    • subraizada3 8y ago
      The SEC and FINRA (regulatory agencies) don't allow day trading for accounts with balances less than $25,000. If you exceed 3 (?) day trades in the past 5 days, your account is locked from day trading for 90 days (so if you buy a stock you will be unable to sell it that day). All exchanges enforce this rule, not just Robinhood.
• DINKDINK 8y ago
  "Robinhood" steals from its users to gives to its investors: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders" [1] "Robinhood Investing App Secretly Makes Millions Selling Millennials' User Data To HFT Firms" [2] [1]https://seekingalpha.com/article/4205379-robinhood-making-millions-selling-millennial-customers-high-frequency-traders https://seekingalpha.com/article/4205379-robinhood-making-mi... [2]https://www.zerohedge.com/news/2018-09-15/robinhood-investing-app-makes-millions-selling-users-data-high-frequencstealing https://www.zerohedge.com/news/2018-09-15/robinhood-investin...
  • Zooper 8y ago
    So, they're exploiting users in some of the ways banks are, but not all ways currently. Other banks do all of the things listed above already, have been for decades.
  • gruez 8y ago
    I skimmed both of your links and they both sound like https://en.wikipedia.org/wiki/Payment_for_order_flow https://en.wikipedia.org/wiki/Payment_for_order_flow, which is regulated. Specifically, they can't give you a worse price than what the NMS provides, so you're not getting a worse price. What's the issue here?
  • talltimtom 8y ago
    Robinhood is a small operation that’s skimming pennies off your transactions to fund its operation. The alternative is banks who are doing the sambut times a hundred and banks are making a ton of money off their customers even with 100 times as many employees as robinhood. They are not bad guys’s. They are still making money(surprice!?), but they are much much more modest about it than traditional banks. This account is a fine example. They don’t need to give you a 3% deal, but they are doing it anyway because it’s benefitting both them and their costumers.
    • dragonwriter 8y ago
      > Robinhood is a small operation that’s skimming pennies off your transactions to fund its operation. The alternative is banks There are other alternatives, e.g., credit unions.
• ankimal 8y ago
  Are there any reasons for not moving my cash reserves from Marcus to Robinhood given: * Marcus' interest rate is also adjustable and is lower than 3%. * Marcus has no ATM access/debit card. * Getting money out of Marcus requires it to be transferred to another checking account.
  • hbosch 8y ago
    Robinhood’s reliability, maybe: https://www.reddit.com/r/wallstreetbets/comments/a5iwgh/robinhood_options_fat_finger_glitchbug_thread/ https://www.reddit.com/r/wallstreetbets/comments/a5iwgh/robi...
• chomp 8y ago
  Do they offer paper checks? I still have need to send out paper checks from time to time.
• hartator 8y ago
  3% checking is huge, it beats all saving accounts out there.
• Matsta 8y ago
  I don't think anyone has mentioned it, but could their motive for this launch is to get in before Monzo launches in the states (source: https://www.forbes.com/sites/oliversmith/2018/10/31/with-a-fresh-billion-dollar-valuation-monzo-is-already-planning-a-2019-funding-round-to-enter-the-us/#6ffde7ea61c2 https://www.forbes.com/sites/oliversmith/2018/10/31/with-a-f...) Monzo has blown up in the UK, and I know their team is growing at a crazy rate. While they aren't profitable yet, they plan to sell financial services through their marketplace (insurance, mortgages etc.) which seems to be a major source of potential income for them (source: https://monzo.com/blog/2017/11/16/monzo-marketplace/ https://monzo.com/blog/2017/11/16/monzo-marketplace/)
• gigatexal 8y ago
  I really, really like these new startups in this space: I super admire Robinhood and N26. I use them both and have nothing but good things to say about my time with them. I’d love to work for either of them too
• zbruhnke 8y ago
  For users asking questions about how this will tell you a lot. Users of Robinhood Checking and Savings earn 3% interest annually on each of their Checking and Savings balances. Robinhood does not charge account maintenance, account minimum, overdraft, ATM, transaction, foreign transaction, transfer, or card replacement fees for Robinhood Checking and Savings. Robinhood Checking and Savings is offered through Robinhood Financial LLC. Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account. The Robinhood Debit Card is issued by Sutton Bank pursuant to a license from Mastercard International, Inc. Neither Sutton Bank nor Mastercard International, Inc. are members of FINRA or SIPC.
• lowercased 8y ago
  “These fees like overdraft fees — they’re not fees millionaires are paying. It’s ordinary folks paying. It’s actually more expensive for those that have less money and it’s cheaper for those that have more money. We think that isn’t right and we think that’s bad business” Bhatt gripes. ================ It's been pretty good business for many banks for years. ???
• IshKebab 8y ago
  I'm sure there is a catch. Normally whenever banks offer good interest rates there is some maximum amount you can invest, or it's only valid for a year, or etc. etc. etc.
• deleted 8y ago
  [deleted]
• ignign0kt 8y ago
  My credit union has 3% yield on checking. However it has requirements (direct deposit, minimum debit uses, etc) and only applies on up to $15,000. I'll be curious to see how Robinhood's will work out though since there's no cap.
  • tintor 8y ago
    Which credit union?
• whitepoplar 8y ago
  To anyone knowledgeable with SIPC, what happens in the event that many firms go bankrupt at the same time (e.g. global financial collapse) and SIPC doesn't have enough funds to cover losses across all firms? As far as I'm aware, FDIC (for bona fide bank accounts) is backed by the full faith and credit of the U.S. Government (even though, on its own, it may not have enough funds to cover all liabilities, Congress can and will authorize additional funding to cover said liabilities), but I'm not sure if that's true for SIPC.
• jccalhoun 8y ago
  This article has some of the worst pr-speak I've seen in an "article." It sounds like it was pasted straight from a press release. The only thing this company is doing that tons of other online banks isn't is 3%. A lot of smaller banks are offering 2%+ so I would guess it is likely other banks will match this 3% https://www.depositaccounts.com/ https://www.depositaccounts.com/
• shift8 8y ago
  Til they lose your money I guess just like the options yesterday (actually, that really stinks for some developer somewhere and was completely horrible so wishing the engineers some good vibes over that and hopefully work out).
• garysahota93 8y ago
  How would they make money on this?
• flexie 8y ago
  This whole checking account / savings account, credit card/ debit card system that Americans have to deal with is so cumbersome and backwards. For Europeans that don't know: Most Americans have (at least) those two accounts, and those two cards. They usually spend from their checking account with their credit card, and save on the savings account. When they spend on their credit card, they sometimes "earn" points, depending on what agreement their bank has with the major retailers. Salary is inserted on the checking account. Some people still receive salary on old fashioned paper checks. Some people still pay in stores using paper checks. Almost everyone, has a lot of paper dollars in their wallet since there are plenty of places in which you need it. Now, on regular intervals, for example at the end of the month, Americans then transfer money from their savings account to their checking account if the salary is not enough to cover. If they forget, they pay high interests and fees. Generally speaking, it's a hassle to transfer money to people you know and fees are hefty. When you use your credit card, no pin code is usually needed. There are regularly issues with your credit card being abused. In the three European countries I have lived in, people have one account, and one card. Depending on your agreement with the bank, it can dip into negative (in which case you pay some interest, but usually not much). If it dips below the agreed max, let's say minus EUR 5,000, then you can't withdraw more until you receive your salary or until you insert money otherwise. People have one card attached to that card. When the balance on the account is positive, it is essentially a debit card. When the balance on the account is negative, it's a credit card. Usually, no points are earned on any spending. In most of Europe, you use your pin code if you use your credit card. Where in America, you regularly spend time on the phone talking to robots and objecting to expenditures you didn't make, that's almost never the case in Europe. People transfer electronically without any fees from account to account. If you go out, and your friend pays dinner, you can transfer your half directly from your smart phone using just his phone number (so essentially just using the contacts on your phone). You don't need Apple or Google pay or similar. It's your bank's app. No fee is charged.
  • Shorel 8y ago
    In Colombia we have the USA system. Yes it seems arbitrary and backwards, and banks love to earn fees. Each credit card is another monthly fee, and you can't do international (Netflix) purchases without one.
• pkaye 8y ago
  > The checking and savings products are not technically bank accounts. They are separate balances held within a Robinhood brokerage account. Your checking and savings funds are not FDIC-insured, but they are protected by insurance from the Securities Investor Protection Corporation, up to $250,000 in cash, according to Robinhood's FAQs. Is there any risk to the SIPC insurance vs FDIC-insured?
• rlorenzo 8y ago
  I wouldn't mind switching to them, but they don't integrate with financial tracking systems like Mint. I find the ability to get a birds eye view of my finances too valuable. Sticking with Ally and their 2% for now. Do wish they integrate with Mint or Personal Capital.
  • foggyeyes69 8y ago
    They integrate with personal capital now, still waiting on Mint!
• jancsika 8y ago
  "Dude, have you tried ifood? After you ingest it your daily workout becomes 3% more effective." "Sounds interesting. Is it FDA approved?" "Well, no, it's FCC approved. You see, legacy foods are ripe for disruption because regulatory has capture created an artificial barrier to new marketplace entrants. With ifood we're able to end run that barrier by..." "Goodbye."
  • snowwrestler 8y ago
    This is an underrated comment.
  • reciprocity 8y ago
    Outstanding.
• tbenst 8y ago
  Lot of misinformation in the marketing. This is not a checking nor savings account. Checking and savings accounts are FDIC insured which gurantees $1 in / $1 out. This is a brokerage account, and if the way robinhood invests the cash goes down, so does your “checking” account. The company could choose to cover the losses but insurance will not if robinhood fails.
• philip1209 8y ago
  I just spent 3 months in London, and it's crazy how Monzo seems to have taken the market. Almost everybody seems to be paying with a Monzo card, regardless of age. Asking around, I consistently heard that Monzo's competitors like Revolut are going to be a future case study in scaling before great product/market fit. I don't know how many people have Revolut accounts, but nobody seems to be using their cards in public. Little details really add up. For instance, Revolut didn't have contactless support for a while, which meant people could not use it on the Tube. Monzo made their cards pink, which creates a physical network effect. The US seems to have a wave of startups trying to reinvent checking accounts right now. I wonder which, if any, will take the market: - Varo (https://varomoney.com https://varomoney.com) - Product and brand don't look very polished and they haven't launched Android support, but they are doing the "hard thing" of getting a bank charter (rather than having a partner bank, like all of the others). - Robinhood (https://robinhood.com https://robinhood.com) - Already offers investment products, so they can get a lot of users quickly. Unclear how good the product will be. (For example - can they support contactless payments with a clear card?) - Chime (https://chimebank.com https://chimebank.com) - Seems to have the most mature and polished product. The killer feature they advertise is "get direct deposits faster", which doesn't seem world-changing to me. My benchmark is Charles Schwab Bank, which offers no fees on any ATM, anywhere. It's what many millennials that I know use. But, it's a bad product and not very user-friendly. Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. I'm curious to see what the future holds, particularly as some foreign banks expand to the USA!
  • zymhan 8y ago
    > Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. Simple closed my account with no notice or recourse, because they failed to notify me that I needed to update some information. I honestly can't believe I trusted my money to people so incompetent at even the basics of business.
  • kevindong 8y ago
    > My benchmark is Charles Schwab Bank, which offers free ATM fees on any ATM, anywhere. It's what many millennials that I know use. But, it's a bad product and not very user-friendly. Why do you say it's a bad product? I use Schwab as my main account and it works great for me.
• httpz 8y ago
  Assuming the transfer from the checking account to the brokerage account is instant, this can give you a lot more liquidity to your stocks. Traditionally, I have to set aside few thousand dollars that I'm absolutely sure I won't need anytime soon, transfer it to a brokerage account, wait few days, remember to check if then money is in, buy the stock, then reverse the process to sell the stock. The round trip of money in checking account to owning a stock took few days but now it can be done under a minute for free. Investing day to day with the money in your checking account is probably not a recommended personal finance practice but I definitely have more money in my checking account than I probably need this month because moving money is too painful.
• coryfklein 8y ago
  *invite only
• josteink 8y ago
  People still have checking accounts? In 2018? And that’s a completely serious question. I literally haven’t seen a check used anywhere the last 25 years. I doubt any place I frequent would accept one. In fact I don’t know a single bank which issues checks... I assume most university students these days wouldn’t even know what a check was, if given one. So where is the market? The past? I mean... you’d need a time machine to use these, right?
  • itsnickk 8y ago
    Mine is essentially my main account I use for anything money-related. It doesn't mean I use checks.
  • whalesalad 8y ago
    What country do you live in? In America, the barebones basic place to keep your money is referred to as a 'checking account'.
    • josteink 8y ago
      Norway. We just call a generic bank account a bank account. Why bring in the term “checking” if it’s not related to checks? I’d call that being intentionally confusing.
  • bytematic 8y ago
    Uni student here. Most people put money in a checking account to use to pay bills/food/etc. You shouldn't be using your savings account money for this.
• smallgovt 8y ago
  This is a marketing bait and switch. One of two things must happen: 1) They lower the interest rate down the line after they've acquired a bunch of customers 2) They limit the offer to certain customers who are lucrative If they sustain this offer for the general public, they will 100% go out of business. The 5 year treasury rate is currently set at 2.75%. Traditionally, people use treasury bonds as a place to park safe money, but the SIPC insurance makes this just as safe (up to $250K).
• coryfklein 8y ago
  If you're looking for a good liquid place to park cash and you don't have a Robinhood invite, check out Dollar Savings Direct. They currently pay 1.8% interest on their savings accounts.
  • dangrossman 8y ago
    Synchrony Bank, Goldman Sachs Bank, Barclays Bank, HSBC Direct pay 2.05%. Ally Bank, American Express National Bank, Discover Bank pay 2%. Google "high yield savings" for lists that are updated monthly. However, this Robinhood offer is for a "checking" account, which while not actually a checking account, still offers the liquidity of one. Savings accounts have a limited number of monthly transfers you're allowed, and you can't use one with a debit card as your main payment account.
    • coryfklein 8y ago
      Wow, it's crazy how sometimes search queries have a "magic" quality to them. I spent a good 1-2 hours trying to find the place with the best rate when I discovered Dollar Savings Direct, but never came across a list like the one you find when searching for "high yield savings".
    • tryptophan 8y ago
      Or even better, open a brokerage account with checking functionality, and put it all in a money market fund yielding ~2.15%, which also will automatically increase rates with about a month lag to any increases the fed does.
• manicksurya 8y ago
  I registered for this and I am in line. To get prior access. I am asked to refer my friends. Just wondering how robinhood shows all my friends though I have not connected robinhood to any of my social network. I feel this as a big privacy issue and it’s concerning a lot.
• mariusz331 8y ago
  This lack of FDIC is slightly worrying: "In an email to Barron’s the head of the SIPC cast doubt on the idea that it would insure checking or savings accounts." source: https://www.barrons.com/articles/robinhood-app-is-offering-a-3-interest-rate-to-take-on-the-banks-51544723146 https://www.barrons.com/articles/robinhood-app-is-offering-a...
• rm2040 8y ago
  accompanying commercial cringe level over 9000 https://www.youtube.com/watch?v=f48SglGrpEg https://www.youtube.com/watch?v=f48SglGrpEg
• acjohnson55 8y ago
  It seems like RH is positioning themselves to become the provider of choice for all things financial to consumers. It'll be interesting to see how that evolves.
• xivzgrev 8y ago
  I love how this is breaking the mold, paying 3% on checking. But when you look at it, it's actually not particularly useful. You want to put money in, and take money out right? In this account, you basically can only withdraw money in 3 ways: 1) use their debit card (inc ATM) 2) transfer money out to a bank via their brokerage account 3) have them mail a check (up to $2500 per day) This excludes all sorts of common use cases: 1) auto pay credit cards 2) link to venmo / other app 3) use other debt cards (e.g., Target) 4) give a check to someone in person 5) make larger payments (e.g., mortgage) ...etc... My guess is these restrictions are there to protect themselves financially. As they reach a certain mass of users, they may relax and be able to take on more risk.
  • myroon5 8y ago
    How do you know it cannot be used for Venmo? It has a debit card and you can use debit cards for free on Venmo
• jshaqaw 8y ago
  FDIC insurance exists for a reason. It prevents runs on the bank. There will be a time of financial crisis in the future and anyone with a Robin Hood account will flee for an FDIC guaranteed account. The run on liquidity will probably destroy the institution.
• kinnth 8y ago
  Monzo in the UK is a great example of non-bricks and mortar bank. I know that UK financial startups always find it hard to break into America simply because banking laws are crazy over there. But I would expect a lot of the UK Fintech to think about trying to break america soon.
• kbos87 8y ago
  My bank just launched an “online only” division which gives me savings at 2.65%, the option to attach checking, and no fees to speak of. The rate is a little lower but still pretty solid. The only caveat is I can’t access that account through their branches; it’s just through their website. I don’t think the whole “we don’t have branches so we can pass along the savings to you” thing is as defensible as it was 5 years ago. Other businesses can do the math and move in that direction if pressured to do so, and it seems like some of the bigger banks already are.
• prepend 8y ago
  So it looks like this is covered by SIPC [0] not FDIC. That’s pretty bad so the account get zeroed out by identity theft, or embezzlement, or robin hood going bankrupt. These are all terrible risks for checking accounts (or money market even). This is basically investing in RobinHood in an easy manner. [0] https://en.wikipedia.org/wiki/Securities_Investor_Protection_Corporation https://en.wikipedia.org/wiki/Securities_Investor_Protection...
• jetru 8y ago
  Can someone provide some examples where you would lose money in an SIPC insured account(like in Robinhood, presumably backed by low risk securities) that would otherwise be safe in a FDIC insured account?
• dawhizkid 8y ago
  For those where no FDIC insurance is a dealbreaker, I recently signed up for SoFi Money https://www.sofi.com/money/fees/ https://www.sofi.com/money/fees/ which is FDIC insured up to 1.5m, offers 2% APY checking, and unlimited ATM fee rebates from any ATM in the world.
• turtlecloud 8y ago
  Can’t even unsubscribe from their emails ugh.
• anonu 8y ago
  3 percent is insane and not sustainable. One year treasuries are at 2.7 percent. I could short treasuries and put all my money in Robinhood... ripe for arbing. How are they making money? My first inclination is to think parking my money with them is super risky... Edit: Looking at today's market and interest rates.
• ctdean 8y ago
  For those interested in maximizing their interest rate on their cash holdings, I like https://www.maxmyinterest.com/ https://www.maxmyinterest.com/ which has deals with many banks for high interest accounts. They make it very easy to move your money around to get the maximum ... uh ... return.
• iknwnothing 8y ago
  You can move up the list by aliasing like abcd@gmail.com, abcd+1@gmail.com, abcd+2@gmail.com etc :/ I expected validation.
• allochthon 8y ago
  Earlier today I simply visited the early access page for Robinhood, and this evening I got an invitation to join it, without having submitted my email address. Presumably it was a blanket spam mailing? Kinda scary.
• erikpukinskis 8y ago
  Is there any way to get cash out? I used Simple for years, and it was great but for the handful of times I needed a thousand dollars in cash.
• NoblePublius 8y ago
  Robinhood has never posted its AUM. Are they going to try to count checking balances as brokerage balances?
• antiviral 8y ago
  Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now? If they use longer term bonds, they will face potential losses as those tend to be volatile relative to interest rate changes. If they use higher-yielding corporate bonds, they face default risk. There's something critical that's not being explained here which is important, and I wouldn't want to put my money in something like that without understanding it thoroughly.
  • speedplane 8y ago
    > Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now? Easy. They're making a calculated decision to lose money on the interest rate, in order to build a relationship and make money on other services.
  • dragonwriter 8y ago
    > Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now? It's a deal to get more trading accounts opened, both directly (people coming to RH for these accounts, which are not separate from trading accounts) and indirectly (e.g., it's a waitlisted feature that you move up in the waitlist by referring people to RH.) They don't need to make money on the savings feature considered in isolation.
• nikolay 8y ago
  So, Robinhood is following the steps of E*Trade?!