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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#211

Post by keredson »

dec0dedab0de wrote: post #186
DINKDINK wrote: post #178

Earlier quoted context omitted.

>their core strategy, which is spending what would otherwise be a marketing budget on keeping commissions at zero, making money on the other ways "Making money others ways" aka stripping their clients of financial privacy by selling their clients' investment-decision data: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders"[1] If your investment brokerage firm's strategy is…

Aren't all orders eventually public anyway? I get that the liquidity that "market makers" claim to create is not really that beneficial to society, but as long as you're not trying to use robinhood to compete with the high speed traders, I don't see a problem with it.

> Aren't all orders eventually public anyway?

no. most orders are not executed on the public exchanges, but by internal matching via your broker and a market maker. (also most exchanges only support trades in multiples of 100 shares.)

Re: Robinhood launches 3% checking account

#212

Post by signet »

DINKDINK wrote: post #178
patio11 wrote: post #115

For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that…

>their core strategy, which is spending what would otherwise be a marketing budget on keeping commissions at zero, making money on the other ways "Making money others ways" aka stripping their clients of financial privacy by selling their clients' investment-decision data: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders"[1] If your investment brokerage firm's strategy is…

That's not true. When Robinhood (or any other retail broker) sends orders to a 3rd party to be filled, there is no way for that 3rd party to see who is sending the order other than it's coming from Robinhood. Robinhood maintains their own book customer orders; the FIX protocol that the orders are coded in doesn't even support that kind of granular info.

There are valid criticisms of payment for order flow but privacy isn't one of them.

Re: Robinhood launches 3% checking account

#213

Post by AdamGibbins »

LandR wrote: post #58
ansible wrote: post #50

Earlier quoted context omitted.

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…

> I could open multiple, but then every month I'd need to spend time transfering money to each to earn the interest.

This is a 30 second job setting up a free ongoing standing order, one to deposit then one to move the money elsewhere the day after every month automatically. This is sufficient to meet the pay-in requirements of all the banks.

> they might want to see a direct debit that is actually a salary

Salaries aren't paid by direct debit, that's something else - an agreement that allows a company to withdraw a variable amount from your account. Some banks have a requirement that you have x direct debits setup (normally 1 or 2), you can work around that with something like https://littledebits.co.uk/Direct-Debits-and-Charity

Cash ISAs serve minimal purpose with the new personal savings allowances. If you're a higher rate tax payer you get £500 tax free, £1000 if you're a lower rate cash payer. I'd question why you're holding so much cash if you're getting a return higher than that, there's often better places for your money.

Check https://www.bankaccountsavings.co.uk/

Re: Robinhood launches 3% checking account

#214

Post by brewdad »

spyspy wrote: post #88
GuiA wrote: post #75

Earlier quoted context omitted.

This seems very likely. Robin Hood users seem to tend towards young and educated, so I imagine the transaction data would be a goldmine.

Is it? I'd expect anyone educated enough to actively trade with robinhood is not using a debit card for ordinary spending.

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.

Re: Robinhood launches 3% checking account

#215

Post by Aunche »

patio11 wrote: post #115

For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that…

> geeks who believe they have outmathed a financial firm should ask themselves "Are financial firms likely to be bad at math?" and "Are financial firms incapable of hiring their own geeks?"

Moviepass was also bought by a financial firm... Come to think of it, they have many similarities. Both companies are basically handing out free money and it's unclear how they would make any profit. People speculate that both companies would make money by "selling data." Unless if Robinhood is doing something very illegal, there is no way that they could make enough money that way.

That said, I do think that Robinhood knows what they're doing. They're getting a lot of publicity right now. In the worst case scenario, Robinhood can cut costs by slashing interest rates and putting a cap on the number of free trades you can do. Their worth would plummet, but later investors would be the ones who pay that price. Overall, Robinhood would still be better off.

Re: Robinhood launches 3% checking account

#216

Post by AdamGibbins »

vidarh wrote: post #80
LandR wrote: post #58

Earlier quoted context omitted.

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…

The time isn't an issue - you can set up standing orders yourself with most UK online banking sites. If they require a direct debit that's another matter.

You can use something like https://littledebits.co.uk/Direct-Debits-and-Charity small cost to you, but probably worth it if you're getting sufficient return.

Re: Robinhood launches 3% checking account

#217

Post by zbruhnke »

For users asking questions about how this will tell you a lot.

Users of Robinhood Checking and Savings earn 3% interest annually on each of their Checking and Savings balances. Robinhood does not charge account maintenance, account minimum, overdraft, ATM, transaction, foreign transaction, transfer, or card replacement fees for Robinhood Checking and Savings. Robinhood Checking and Savings is offered through Robinhood Financial LLC. Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account. The Robinhood Debit Card is issued by Sutton Bank pursuant to a license from Mastercard International, Inc. Neither Sutton Bank nor Mastercard International, Inc. are members of FINRA or SIPC.

Re: Robinhood launches 3% checking account

#218

Post by mikeash »

patio11 wrote: post #115

For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that…

Why would they expect this account to be used as a high-velocity, low-balance account rather than a park-your-savings account, given the rate?

I agree that the high rate is reasonable in that scenario, but the high rate is also actively fighting to ensure that scenario doesn’t happen.

I don’t see people here thinking that Robinhood is bad at math. They’re all asking, “what’s the catch?” Because it sure seems like there must be one.

Re: Robinhood launches 3% checking account

#219

Post by jonwachob91 »

ptero wrote: post #96
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)

Brokerages love fat cats and most provide free high quality additional insurance up to at least 5-10M. What happens if brokerage fails? My bet is its insurance, reinsurance or gov't would bail investors out (ask Lehman clients many of whom had accounts a LOT bigger than 250k). My guess is that it is safe to keep at least 5M in a single brokerage, but decide for yourself.

Do you have any links or reading material about what lehman clients were able to pull out?

Re: Robinhood launches 3% checking account

#220

Post by ww520 »

mlthoughts2018 wrote: post #152
delecti wrote: post #129

Earlier quoted context omitted.

Your question seems to be implying that you believe financial firms are more stupid than greedy. In contrast to Hanlon's razor, I think it's usually fair to assume greed over stupidity.

You are just wrong. Being unable to overcome bureaucracy or organizational tech debt is not a matter of stupidity, and various actors up and down the hierarchy can have misaligned incentives that ensure it remains contentious and political. Furthermore, many boutique investment business exist for purposes of client services and plausible deniability on part of the client’s board. I’ll give you a concrete example from…

Wow. Thanks for sharing the story. They were literally setting up a strawman to beat down.
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