5 ms·

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.
    - dragonwriter 8y ago
      > I'd expect anyone educated enough to actively trade with robinhood You don't have to be educated to actively trade, with RH or otherwise. You just need cash and confidence. (Note, I'm not saying that is enough to be successful or make active trading worthwhile, but the customer pool isn't limited to people who should be actively trading.)
cat199 8y ago
> Anyone have thoughts on how this is possible? ... they are paying out money to the depositor instead of the shareholders
- deleted 8y ago
  [deleted]
ac29 8y ago
My bank is offering a 3.01% 18 month CD, and a quick perusal of current 12 month rates shows ~2.8% isn't hard to get: https://www.depositaccounts.com/cd/ https://www.depositaccounts.com/cd/ 5-year CDs are well over 3%.
cascom 8y ago
i suspect its a combination of (1) 6 month treasuries are yielding ~2.5% (2) they are getting revenue share from interchange fees on spending that they are passing on in the form of interest as opposed to some cash back/rewards program
- arcticbull 8y ago
  I’d imagine Sutton Bank, issuing their debit cards, is small enough to be Durbin-exempt which means they can charge full credit card interchange rates instead of the few cents per transaction the big guys are capped at. They can also collect data about their customers to offer lending products down the road like Mint does, so it can even be a marketing expense.
anonu 8y ago
Exactly the correct point... it's not possible. You have to keep your money in there for a while (minimum thresholds)- there are probably caveats that you need to turnover a certain % of your Mastercard (since part of that 3% is on chargebacks). short term (1 year) treasuries are yielding 2.7%... so the only way to get 3% is to take more risk. Risky proposal to park your money with robin hood.
- beatgammit 8y ago
  Well, it's FDIC insured when I checked, so you can get your money back if things go south. I wouldn't park all of my cash there, but I would consider putting a chunk of my savings there.

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.
  - dragonwriter 8y ago
    > I'd expect anyone educated enough to actively trade with robinhood You don't have to be educated to actively trade, with RH or otherwise. You just need cash and confidence. (Note, I'm not saying that is enough to be successful or make active trading worthwhile, but the customer pool isn't limited to people who should be actively trading.)

cat199 8y ago

> Anyone have thoughts on how this is possible? ... they are paying out money to the depositor instead of the shareholders

deleted 8y ago
[deleted]

ac29 8y ago

My bank is offering a 3.01% 18 month CD, and a quick perusal of current 12 month rates shows ~2.8% isn't hard to get: https://www.depositaccounts.com/cd/ https://www.depositaccounts.com/cd/ 5-year CDs are well over 3%.

cascom 8y ago

i suspect its a combination of (1) 6 month treasuries are yielding ~2.5% (2) they are getting revenue share from interchange fees on spending that they are passing on in the form of interest as opposed to some cash back/rewards program

arcticbull 8y ago
I’d imagine Sutton Bank, issuing their debit cards, is small enough to be Durbin-exempt which means they can charge full credit card interchange rates instead of the few cents per transaction the big guys are capped at. They can also collect data about their customers to offer lending products down the road like Mint does, so it can even be a marketing expense.

anonu 8y ago

Exactly the correct point... it's not possible. You have to keep your money in there for a while (minimum thresholds)- there are probably caveats that you need to turnover a certain % of your Mastercard (since part of that 3% is on chargebacks). short term (1 year) treasuries are yielding 2.7%... so the only way to get 3% is to take more risk. Risky proposal to park your money with robin hood.

beatgammit 8y ago
Well, it's FDIC insured when I checked, so you can get your money back if things go south. I wouldn't park all of my cash there, but I would consider putting a chunk of my savings there.