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Robinhood launches 3% checking account

techcrunch.com

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Re: Robinhood launches 3% checking account

#101

Post by dec0dedab0de »

1123581321 wrote: post #74
robraven wrote: post #60

Earlier quoted context omitted.

Does this mean it's not smart to store more than 250k in robinhood? (I don't, just wondering)

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.

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.

Re: Robinhood launches 3% checking account

#103

Post by Someone1234 »

apo wrote: post #34

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?

> For example, I didn't see anything about how funds are insured.

It is listed directly on their Checking & Savings page, it has it's own featured section, you only have to scroll twice to see it.

> Every Robinhood account is SIPC insured up to $250,000 in cash and protected by modern encryption so you can rest easy and save confidently.

Re: Robinhood launches 3% checking account

#104

Post by a13n »

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.

Re: Robinhood launches 3% checking account

#105

Post by bogomipz »

1123581321 wrote: post #74
robraven wrote: post #60

Earlier quoted context omitted.

Does this mean it's not smart to store more than 250k in robinhood? (I don't, just wondering)

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.

The limit is actually per each ownership category:

https://www.fdic.gov/deposit/covered/categories.html

Re: Robinhood launches 3% checking account

#106

Post by jpmoyn »

krn wrote: post #81
ericliuche wrote: post #29

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

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.

Well like any bank they are investing the money held with them.

Re: Robinhood launches 3% checking account

#107

Post by roganartu »

warent wrote: post #22
zaroth wrote: post #12

Earlier quoted context omitted.

I would be very unconfortable depositing large amounts of cash at an ATM unless it was a first-party (owned by my bank) ATM with the newest tech that can scan bills as they go in. Even then I think for cash I might be more comfortable handing it to a teller and getting a receipt. These third party low-rent ATMs at convenience stores don’t even take deposits. They are withdrawal only.

Not to come across like this is an attack, but do you have any evidence/rationale behind that fear? I've never heard of ATMs mishandling money, although I haven't researched it before.

The coin counting machines in the US closed a couple of years ago due to a class action suit for chronic short-changing: https://www.bankrate.com/finance/banking/banks-expel-coin-co...

Re: Robinhood launches 3% checking account

#108

Post by justaguyhere »

kin wrote: post #23

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.

my dad used to get > 10% rate (not US, and yes, it was much higher than inflation rate). Now we think 3% is bonkers. How times have changed!

Re: Robinhood launches 3% checking account

#109

Post by davidlee1435 »

krn wrote: post #81
ericliuche wrote: post #29

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

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.

> 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.

Re: Robinhood launches 3% checking account

#110

Post by everybodyknows »

zaroth wrote: post #32
mrfusion wrote: post #16

Will the 3% be a long term thing or is it just a sign up gimmick?

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…

More fine print elsewhere:

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.

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