I'm sure there is a catch. Normally whenever banks offer good interest rates there is some maximum amount you can invest, or it's only valid for a year, or etc. etc. etc.
Robinhood launches 3% checking account
231–240 of 684 posts
Re: Robinhood launches 3% checking account
#232Earlier quoted context omitted.
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 the…
I assume they're trying to break the inertia people have with major banks. There's no reason to change bank unless there's some substantial incentive like favorable interest rate to offset the hassle involved. I'm not sure there's an ulterior motive here other than customer acquisition.
Agreed, they are trying to buy customers, if it turns out that they can't convert these customers into traders they will lower the rate to a breakeven amount and not care if they lose those accounts.
Re: Robinhood launches 3% checking account
#233Earlier quoted context omitted.
That's pretty standard for a lot of these new-tech-wave style brokerage psuedo-banks. Betterment, Wealthfront, etc which also have a form of savings accounts (don't believe they offer checking accounts like rh is doing here) are SIPC only as well.
Wealthfront doesn’t offer a “savings” account. Betterment has their Smart Saver[1], which offers a 2.09% rate and attempts to position it as vastly better than FDIC-insured accounts by comparing to some terrible “national average” instead of the ~2% rates that Ally, Capital One & others offer. It’s still an investment account with the risk, tax implications & liquidity challenges that such an account has. Their misle…
Yeah, most of these firms use pretty bad metric comparisons for their marketing efforts to inflate how much better it is when in reality it's par for the course with Ally and others. Now that doesn't mean it's bad. Having used it there aren't that many challenges (I'd argue less because information is clear and the interface is nice to work with) and it's all bonds and the risk is low. Unless you have an argument bonds are risky compared to cash sitting against inflation. It's still all SIPC insured.
> Smart Saver’s built-in portfolio is the Betterment Portfolio Strategy’s allocation at 0% stocks, 100% bonds.
The one big downside could be is if you need cash _now_ it can take a few days (5?) before being able to use it.
Re: Robinhood launches 3% checking account
#2343% 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…
All your credit card companies do the same.
Re: Robinhood launches 3% checking account
#235Earlier quoted context omitted.
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…
With 3% interest, that would be where I park money. What information will they get from me other than I dumped $ in and it's sitting there?
you are getting 3% interest in paper money which has hidden inflation rate of ...?
better to buy gold/silver/real estate IMHO.
Re: Robinhood launches 3% checking account
#2363% 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…
> 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.
I'm curious what the harm here is. Are they going to blackmail people who shop at their competitors?
Re: Robinhood launches 3% checking account
#237Earlier 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…
Some workplaces can split your direct deposit from payroll into multiple accounts. _If_ you can hit the deposit limits that way. The bank doesn't need to know it is not your entire salary.
Re: Robinhood launches 3% checking account
#238Earlier quoted context omitted.
I assume they're trying to break the inertia people have with major banks. There's no reason to change bank unless there's some substantial incentive like favorable interest rate to offset the hassle involved. I'm not sure there's an ulterior motive here other than customer acquisition.
Right, but that incentive is only substantial if you’re going to park a lot of money there, which is exactly the sort of customer they don’t want according to the comment I replied to.
They may be playing this on two sides: the more obvious one which is acquiring customers to feed their trading business, and simply trying to evolve into a financial institution, which should bolster their valuation in their inevitable IPO in 2019 or 2020. Their backers might be content to burn money for a year or so to get a larger multiplier at some point in the future.
Re: Robinhood launches 3% checking account
#239Earlier quoted context omitted.
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…
With 3% interest, that would be where I park money. What information will they get from me other than I dumped $ in and it's sitting there?
Why have two checking accounts?
Re: Robinhood launches 3% checking account
#240Are there any reasons for not moving my cash reserves from Marcus to Robinhood given: * Marcus' interest rate is also adjustable and is lower than 3%. * Marcus has no ATM access/debit card. * Getting money out of Marcus requires it to be transferred to another checking account.
Robinhood’s reliability, maybe: https://www.reddit.com/r/wallstreetbets/comments/a5iwgh/robi...