Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#301

Post by superfrank » Thu, Dec 13, 2018, 6:41 PM UTC

Havoc wrote: post #102

For those not aware of it: ton of people lost money yesterday because RH options trading system shat itself. I wouldn't trust them with my beer money https://old.reddit.com/r/wallstreetbets/comments/a5iwgh/robi...

Robinhood definitely had down time yesterday, but I'd like to make a note that /r/Robinhood overreacts to things like crazy. I'm pretty sure 95% of the people in there are under 20 and daytrading options with less than $5000.

I'm bringing this up because, while some people did lose money yesterday because of Robinhood's downtime, there we also a lot of people claiming to have lost money, but were blatantly lying.

I'm not trying to let RH off the hook, but /r/robinhood makes it sound like RH was robbing them at gun point.

Re: Robinhood launches 3% checking account

#302

Post by talltimtom » Thu, Dec 13, 2018, 6:43 PM UTC

abhiminator wrote: post #154

a13n wrote: post #104

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.

>Banks are going to have to decide whether they want to raise their rates to compete, or face bleeding customers. I'm sure the big boy banks are here stay. Most of them are in the category of, "too big to fail" (as the crisis a decade ago highlighted) and upstarts like Robinhood are but a blip-in-the-radar than a real threat to the established players, imo.

To big to fail doesn’t really protect them if they lose their costumers. A bank with tons of customers that’s bleeding cash due to a market crash is salvageable(and remember the investment in bailing them out payed off), a bank that’s bleeding cash because it doesn’t have any customers is not salvageable and no longer “big”, so it will fail.

Re: Robinhood launches 3% checking account

#303

Post by rlorenzo » Thu, Dec 13, 2018, 6:43 PM UTC

I wouldn't mind switching to them, but they don't integrate with financial tracking systems like Mint. I find the ability to get a birds eye view of my finances too valuable. Sticking with Ally and their 2% for now. Do wish they integrate with Mint or Personal Capital.

Re: Robinhood launches 3% checking account

#304

Post by jancsika » Thu, Dec 13, 2018, 6:45 PM UTC

"Dude, have you tried ifood? After you ingest it your daily workout becomes 3% more effective."

"Sounds interesting. Is it FDA approved?"

"Well, no, it's FCC approved. You see, legacy foods are ripe for disruption because regulatory has capture created an artificial barrier to new marketplace entrants. With ifood we're able to end run that barrier by..."

"Goodbye."

Re: Robinhood launches 3% checking account

#305

Post by foggyeyes69 » Thu, Dec 13, 2018, 6:45 PM UTC

rlorenzo wrote: post #303

I wouldn't mind switching to them, but they don't integrate with financial tracking systems like Mint. I find the ability to get a birds eye view of my finances too valuable. Sticking with Ally and their 2% for now. Do wish they integrate with Mint or Personal Capital.

They integrate with personal capital now, still waiting on Mint!

Re: Robinhood launches 3% checking account

#306

Post by im3w1l » Thu, Dec 13, 2018, 6:46 PM UTC

jcoffland wrote: post #259

abuckenheimer wrote: post #250

Earlier quoted context omitted.

Yes HFT buys trade flow from robin hood because they make more money executing against it but that's not actually to the detriment of the people on the robin hood app. The main way HFT firms make money is by making a market, they offer to buy and sell stocks cheaper than anyone else and get paid by people crossing the spread and sometimes exchange fees. The reason robinhood trade flow is valuable to HFT firms Isn't b…

The stock market is a zero sum game. If HFTs are making money then someone else's is losing it. The other traders who's trades are closest are the most likely losers. HFTs will tell you what a great liquidity service they provide but they are doing nothing more than using the equivalent of insider information to skim the cream off the top.

Here is my understanding. Let aNormally the investor would get the stock since they placed their order first. But since the HFT firm is paying for the order they get it instead. If things go well the HFT firm can sell to the investor at x+b, if things go poorly they cut their losses and sell at x.

The investor that didn't get the order and has to buy it from the HFT firm at x+b is the loser.

The money that funds this dance comes from the millennial who sold a stock worth x+c at x, but that would have happened regardless.

Re: Robinhood launches 3% checking account

#307

Post by tbenst » Thu, Dec 13, 2018, 6:46 PM UTC

Lot of misinformation in the marketing. This is not a checking nor savings account. Checking and savings accounts are FDIC insured which gurantees $1 in / $1 out. This is a brokerage account, and if the way robinhood invests the cash goes down, so does your “checking” account. The company could choose to cover the losses but insurance will not if robinhood fails.

Re: Robinhood launches 3% checking account

#308

Post by jorams » Thu, Dec 13, 2018, 6:47 PM UTC

JoBrad wrote: post #253

mikeash wrote: post #218

Earlier 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’m sure a lot of people might start out that way. But if you get free money for parking your cash there, why not use that money to dabble in some trading? Seems like there is little downside for the company, and potential for upside for the consumer. Pretty good acquisition strategy, in my opinion.

Alternatively: If you get free money for parking your cash there, why risk that money by trading?

3% guaranteed earnings is a very good deal without any downside, while the risks involved with trading that money are substantial.

Re: Robinhood launches 3% checking account

#309

Post by dragonwriter » Thu, Dec 13, 2018, 6:48 PM UTC

dec0dedab0de wrote: post #101

1123581321 wrote: post #74

Earlier quoted context omitted.

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.

> It's actually per bank, per type of account. So $250k in savings accounts, $250k in checking, $250 in Money Market, etc.

It's not per type of account, it's per ownership category. Ownership categories are:

(1) Single accounts

(2) Certain self-directed retirement accounts

(3) Joint accounts

(4) Revocable trust accounts

(5) Irrevocable trust accounts

(6) Employee benefit (non-self-directed) plan accounts

(7) Corporation, partnership, or unicorporated association account

(8) Government accounts

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

With a little bit of work, you can probably spread your money into a few of those categories without much problem and have more than $250k coverage, but it's not as easy as just having checking and savings.

Re: Robinhood launches 3% checking account

#310

Post by bduerst » Thu, Dec 13, 2018, 6:49 PM UTC

abhiminator wrote: post #154

a13n wrote: post #104

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.

>Banks are going to have to decide whether they want to raise their rates to compete, or face bleeding customers. I'm sure the big boy banks are here stay. Most of them are in the category of, "too big to fail" (as the crisis a decade ago highlighted) and upstarts like Robinhood are but a blip-in-the-radar than a real threat to the established players, imo.

Yeah, there aren't many small players since everything consolidated in the early 2000s.

RH likely won't sustain this interest rate, and it's more akin to a temporary promotional play to acquire new traders.