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(https://old.reddit.com/r/M1Finance/comments/9hk0dc/m1_team_a... has some light details on the M1 banking product for anyone interested)
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.
I guess I'm a bit naive, why is this?
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.
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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?
Does this mean it's not smart to store more than 250k in robinhood? (I don't, just wondering)
Edit: I forgot about the details of the limit. Thank you all.
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?
Might be some companies really wanting to know what high rollers on Robinhood are buying. Could be a bit of both.
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?
The 30 year treasury rate is barely over 3% so I'm honestly not sure how they can make any sort of real money on this. I would expect the rate to change over time, especially if the 30 year dips under 3%. But it seems theoretically possible given the absence of brick-and-mortar spaces and all the overhead and costs that comes along with that.
EDIT - I forgot about the interchange fee sharing when you use the debit card. So that is where the profit would be. Seems like the goal is to target roughly the 30 year treasury rate and pass that through to the customer and they can breakeven. And the profit comes from actually using the debit card. Not to mention potentially selling that user data.
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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.
Wow that's a bummer.
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.
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?
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-slightl…
Banks make boatloads of money without needing to sell data, but rather selling loans. Not even needing to loan money, offering 3% interest, with how high treasury notes are these days, is _really_ easy for banks to do. The problem is that generally banks also have really high overhead, something Robinhood doesn't.
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What's stopping you from opening up similar accounts with other banks?
Most banks that will give you a current account will want to see £xxxx deposited every month (e.g, your salary) to earn any interest (if they even offer interest, it's rare on a current account). I could open multiple, but then every month I'd need to spend time transfering money to each to earn the interest. Im not sure that would even count towards deposited every month, they might want to see a direct debit that i…