6 ms·

here the catch, I believe: 1. it's ensured by SIPC, not FDIC, so it's not as safe. 2. They're going to lower that 3% rate down whatever all the other banks are

here the catch, I believe: 1. it's ensured by SIPC, not FDIC, so it's not as safe. 2. They're going to lower that 3% rate down whatever all the other banks are at (2%) in a couple of years, unless the interest rates catch up to their higher rate, which they are expected to do in about 2 to 3 years: at that time, 3% will be roughly the norm for the highest interest savings accounts. I remember the days when Citibank would give out 4% interest about a decade ago. now of course, it's about 0%. It's just classic bait and switch.

notyourday 8y ago
Cash balances ensured by SIPC are safe to the coverage amount. 100% safe actually.
- Scoundreller 8y ago
  I’m sure they said that about Cyprus and Iceland too.
  - deleted 8y ago
    [deleted]
  - yorwba 8y ago
    As far as I can tell, the coverage amount of 100,000 euros was respected in these cases, probably precisely to avoid doubts like that about the safety of deposits.
    - Scoundreller 8y ago
      The UK and Dutch depositors in the Icelandic banks got bailed out by the UK and Dutch taxpayer. Iceland's government/deposit insurance did not pull through. Cyprus wasn't much different either. https://www.telegraph.co.uk/finance/financialcrisis/11877219/Did-people-who-put-money-into-Icesave-get-it-back.html https://www.telegraph.co.uk/finance/financialcrisis/11877219... https://www.telegraph.co.uk/finance/financialcrisis/9965943/British-solution-saves-Laiki-UK-deposits-from-Cyprus-haircut.html https://www.telegraph.co.uk/finance/financialcrisis/9965943/...
      - yorwba 8y ago
        Your first link doesn't mention the insurance amount at all, the second only talks about deposits beyond the 100,000 euro limit and apparently British customers got an even better deal with the higher limit of £85,000.
  - notyourday 8y ago
    If the SPIC fails to cover the cash balances to the coverage limits, the financial world as we know it stopped existing. This are cash balances, not money market funds or any other funds.
    - mikelward 8y ago
      Bloomberg says it's a money market account. https://www.bloomberg.com/opinion/articles/2018-12-13/robinhood-s-3-interest-checking-is-just-a-money-market-fund https://www.bloomberg.com/opinion/articles/2018-12-13/robinh... Robinhood's checking page says "Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account."
      - notyourday 8y ago
        I have not dug thought this specific offering but here is how it works in general it works this way: Account has 3 parts: 1. Marketable securities -- value is NOT insured. 2. Cash on hand -- value IS ensured. 3. Money market fund -- value is NOT insured. (3) may or may not be offered and if (3) is offered it has to be elected by the account holder. Money cannot flow from (1) to (3) or from (3) to (1) bypassing (2) due to securities regulations -- one cannot pay for one security with another security, a settled cash must be used. If the APY is on (2) they will get killed by the fatwallet/slickdeals crowd. If the APY is on (3) it is more complicated but debit/check transactions against (3) are very expensive to clear so I don't quite see what the play is.
    - toastermoster 8y ago
      Apparently the president of the SIPC stated that Robinhood didn't contact the SIPC before making their announcement. The SIPC president Stephen Harbeck is on record saying that "SIPC protects cash that is deposited with a brokerage firm for one limited purpose... the purpose of purchasing securities. Cash deposited for other reasons would not be protected. SIPC does not protect checking and savings accounts since the money has not been deposited for a protected purpose." He later stated that the SEC would need to take the lead on clarifying the matter though. I have a one-year emergency fund with Robinhood that is invested in index funds (secondary emergency fund as the primary emergency fund is in cash). I think I'll keep my primary emergency fund in the PNC high yield savings account for now until all that gets worked out.
jonknee 8y ago
> I remember the days when Citibank would give out 4% interest about a decade ago. now of course, it's about 0%. It's just classic bait and switch. That's not a bait in switch, interest rates plummeted globally to the point a lot of people were happy to even get 0%!
brown9-2 8y ago
> It's just classic bait and switch. Are you unaware that interest rates today are drastically different than a decade ago?
- pascalxus 8y ago
  all the other top savings accounts are currently 2% to 2.2%. i think they are not going to maintain that lead.
- cperciva 8y ago
  The Federal funds rate is currently 2.00-2.25%. A decade ago, the rate was 1.00%. (And three days later, it was 0.00-0.25%.)
theartfuldodger 8y ago
At this time it is not insured. The SIPC openly stated this. The product is already being renamed as a "money management fund"

notyourday 8y ago

Cash balances ensured by SIPC are safe to the coverage amount. 100% safe actually.

Scoundreller 8y ago
I’m sure they said that about Cyprus and Iceland too.
- deleted 8y ago
  [deleted]
- yorwba 8y ago
  As far as I can tell, the coverage amount of 100,000 euros was respected in these cases, probably precisely to avoid doubts like that about the safety of deposits.
  - Scoundreller 8y ago
    The UK and Dutch depositors in the Icelandic banks got bailed out by the UK and Dutch taxpayer. Iceland's government/deposit insurance did not pull through. Cyprus wasn't much different either. https://www.telegraph.co.uk/finance/financialcrisis/11877219/Did-people-who-put-money-into-Icesave-get-it-back.html https://www.telegraph.co.uk/finance/financialcrisis/11877219... https://www.telegraph.co.uk/finance/financialcrisis/9965943/British-solution-saves-Laiki-UK-deposits-from-Cyprus-haircut.html https://www.telegraph.co.uk/finance/financialcrisis/9965943/...
    - yorwba 8y ago
      Your first link doesn't mention the insurance amount at all, the second only talks about deposits beyond the 100,000 euro limit and apparently British customers got an even better deal with the higher limit of £85,000.
- notyourday 8y ago
  If the SPIC fails to cover the cash balances to the coverage limits, the financial world as we know it stopped existing. This are cash balances, not money market funds or any other funds.
  - mikelward 8y ago
    Bloomberg says it's a money market account. https://www.bloomberg.com/opinion/articles/2018-12-13/robinhood-s-3-interest-checking-is-just-a-money-market-fund https://www.bloomberg.com/opinion/articles/2018-12-13/robinh... Robinhood's checking page says "Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account."
    - notyourday 8y ago
      I have not dug thought this specific offering but here is how it works in general it works this way: Account has 3 parts: 1. Marketable securities -- value is NOT insured. 2. Cash on hand -- value IS ensured. 3. Money market fund -- value is NOT insured. (3) may or may not be offered and if (3) is offered it has to be elected by the account holder. Money cannot flow from (1) to (3) or from (3) to (1) bypassing (2) due to securities regulations -- one cannot pay for one security with another security, a settled cash must be used. If the APY is on (2) they will get killed by the fatwallet/slickdeals crowd. If the APY is on (3) it is more complicated but debit/check transactions against (3) are very expensive to clear so I don't quite see what the play is.
  - toastermoster 8y ago
    Apparently the president of the SIPC stated that Robinhood didn't contact the SIPC before making their announcement. The SIPC president Stephen Harbeck is on record saying that "SIPC protects cash that is deposited with a brokerage firm for one limited purpose... the purpose of purchasing securities. Cash deposited for other reasons would not be protected. SIPC does not protect checking and savings accounts since the money has not been deposited for a protected purpose." He later stated that the SEC would need to take the lead on clarifying the matter though. I have a one-year emergency fund with Robinhood that is invested in index funds (secondary emergency fund as the primary emergency fund is in cash). I think I'll keep my primary emergency fund in the PNC high yield savings account for now until all that gets worked out.

jonknee 8y ago

> I remember the days when Citibank would give out 4% interest about a decade ago. now of course, it's about 0%. It's just classic bait and switch. That's not a bait in switch, interest rates plummeted globally to the point a lot of people were happy to even get 0%!

brown9-2 8y ago

> It's just classic bait and switch. Are you unaware that interest rates today are drastically different than a decade ago?

pascalxus 8y ago
all the other top savings accounts are currently 2% to 2.2%. i think they are not going to maintain that lead.
cperciva 8y ago
The Federal funds rate is currently 2.00-2.25%. A decade ago, the rate was 1.00%. (And three days later, it was 0.00-0.25%.)

theartfuldodger 8y ago

At this time it is not insured. The SIPC openly stated this. The product is already being renamed as a "money management fund"