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You can open an Ameritrade or any other brokerage account and deposit money into the account with no intention of purchasing securities. There is no dispute th
by 300bps 8y ago
You can open an Ameritrade or any other brokerage account and deposit money into the account with no intention of purchasing securities. There is no dispute that the SIPC would cover your account in that instance.
The only thing that has changed here is Robinhood is explicitly marketing their brokerage account as being able to be used as a savings account without any need to invest in securities.
It’s not black and white on either side. If there ever was a default event, it would surely go to court and it’s not 100% clear who would win. For that reason, I wouldn’t make use of the account.
- devman0 8y agoI'm not sure how Ameritrade works, but the other brokers I've used (Fidelity, Schwab, and Vanguard) you either have an 'uninvested' position where your cash is parked (generally a federal money market fund) or bank sweep that is FDIC insured. They never actually hold cash for you it is either in a money market or a bank sweep.
- SomeHacker44 8y agoThis.
- maratd 8y agoIt's highly likely that Robinhood will do the same. It'll be parked in a money market, with the option of writing checks, etc. all of which you can do already with the other brokerages. The new thing here I think is the ATM card and them covering the difference between the money market rate and 3%, which right now is less than 1%. They'll probably make up that difference via interchange fees when you use the debit card. That SIPC thing though ... that's a bit of a wrench in the gears.
- gcbw2 8y agoThen why are those organizations saying they won't be insured?
- aakilfernandes 8y agoWhat other reason would you have an Ameritrade account?
- warp_factor 8y agoZero fees on their international debit card (one of the best )
- gcbw2 8y agoalmost every bank has that. mine even reimburse the ATM fee. (ok, unless you count the US crap list such as BoA, etc)