Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#321

Post by kyleomalley » Thu, Dec 13, 2018, 6:56 PM UTC

snowwrestler wrote: post #272

jcoffland wrote: post #259

Earlier quoted context omitted.

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.

The stock market is not a zero sum game. I don't know where people get this idea that because every transaction involves two sides, the sum is therefore zero. Every transaction in the "real economy" also has two sides, and we all know that grows. The stock market grows too. There are even indexes to track how well it is growing.

The “real economy” runs on a fiat (inflating) currency system that is effectively not zero sum. The stock market is a closed system that currencies feed into - at the end of the day it’s still a measure of a fixed amount of value and thus zero sum.

Re: Robinhood launches 3% checking account

#322

Post by dragonwriter » Thu, Dec 13, 2018, 6:56 PM UTC

talltimtom wrote: post #311

DINKDINK wrote: post #170

"Robinhood" steals from its users to gives to its investors: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders" [1] "Robinhood Investing App Secretly Makes Millions Selling Millennials' User Data To HFT Firms" [2] [1] https://seekingalpha.com/article/4205379-robinhood-making-mi... [2] https://www.zerohedge.com/news/2018-09-15/robinhood-investin...

Robinhood is a small operation that’s skimming pennies off your transactions to fund its operation. The alternative is banks who are doing the sambut times a hundred and banks are making a ton of money off their customers even with 100 times as many employees as robinhood. They are not bad guys’s. They are still making money(surprice!?), but they are much much more modest about it than traditional banks. This account…

> Robinhood is a small operation that’s skimming pennies off your transactions to fund its operation. The alternative is banks

There are other alternatives, e.g., credit unions.

Re: Robinhood launches 3% checking account

#323

Post by shawn-butler » Thu, Dec 13, 2018, 6:57 PM UTC

deminature wrote: post #225

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 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.

> There's no reason to change bank unless there's some substantial incentive

Or you bank at Wells Fargo or some other institution whose corrupt practices spill out into public.

Re: Robinhood launches 3% checking account

#324

Post by talltimtom » Thu, Dec 13, 2018, 6:59 PM UTC

ikeboy wrote: post #242

rexaliquid wrote: post #82

Earlier quoted context omitted.

It's standard to talk in annualized interest rates to make simple comparisons between accounts. A daily interest rate of 0.008 % will compound up to just over 3 % of effective annual rate.

If the daily interest rate is 0.008 then the annualized rate is 2.92%, not 3%. The standard is to multiply by the number of periods, not to take compounding into the calculation.

Why would the standard be to calculate a number that has no use and isn’t rooted in reality? If the rate is 3% annually and paid out daily, the the daily rate is the number that compounded yields 3% annually....

Re: Robinhood launches 3% checking account

#325

Post by talltimtom » Thu, Dec 13, 2018, 6:59 PM UTC

mrnobody_67 wrote: post #173

vthallam wrote: post #17

Link to their blog post instead - https://blog.robinhood.com/news/2018/12/13/introducing-robin...

I wonder if they will cut off people who deposit 7 figures.

Might just put a cap. I have a 5% account which sounds awesome, but it’s caped at 8000$ and then goes to zero.

Re: Robinhood launches 3% checking account

#326

Post by free652 » Thu, Dec 13, 2018, 6:59 PM UTC

flexie wrote: post #284

This whole checking account / savings account, credit card/ debit card system that Americans have to deal with is so cumbersome and backwards. For Europeans that don't know: Most Americans have (at least) those two accounts, and those two cards. They usually spend from their checking account with their credit card, and save on the savings account. When they spend on their credit card, they sometimes "earn" points, de…

Europe doesn't have credit cards, it's all debit cards. And I see a US system much more advantageous than in Europe. In many European countries cards aren't as widely accepted as in US.

Re: Robinhood launches 3% checking account

#327

Post by asdff » Thu, Dec 13, 2018, 7:02 PM UTC

dixie_land wrote: post #163

I think folks are overthinking this. The math itself doesn't matter. Have you seen recent Robinhood commercials popping up on TV? Their whole business is to encourage folks that should not be day trading to day trade. Having your money parked there just facilitates knee-jerk-reaction and follow-the-crowd trading.

> Their whole business is to encourage folks that should not be day trading to day trade

Trading for most people used to be deliberately obtuse. $7.5 commission per trade is criminal for most people, so is charging $50 a month to get a weekly email with basic technical analysis, but that's literally been the bread and butter of retail investing for decades and no one bats an eye to how deliberately ridiculous it all is.

Robinhood drops all the barriers from buying stocks, gives you a warning before they even let you touch options, and they are the evil here? This is like saying venmo is dumb because it lets people wipe out their checking account quicker than writing a check; don't blame the company for idiotic users. Robinhood doesn't even let you day trade more than 4x in a given week unless you have 25k in your trading account, just like every brokerage.

Re: Robinhood launches 3% checking account

#328

Post by freejak » Thu, Dec 13, 2018, 7:02 PM UTC

snowwrestler wrote: post #169

krn wrote: post #81

Earlier quoted context omitted.

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.

Checking accounts are loss leaders for most banks, even with low interest rates. And big brokerages have offered this type of account for decades. It's usually called a "cash management account" and works just like a checking account--takes direct deposit, provides checks and an ATM card, etc. Robinhood's innovation might simply be in calling it a "checking account" so the interest rate looks huge (it's actually smal…

I'm curious how they can even get away with calling it a checking and savings account.

Re: Robinhood launches 3% checking account

#329

Post by tathougies » Thu, Dec 13, 2018, 7:04 PM UTC

zackmorris wrote: post #282

subraizada3 wrote: post #257

Earlier quoted context omitted.

The SEC and FINRA (regulatory agencies) don't allow day trading for accounts with balances less than $25,000. If you exceed 3 (?) day trades in the past 5 days, your account is locked from day trading for 90 days (so if you buy a stock you will be unable to sell it that day). All exchanges enforce this rule, not just Robinhood.

I hope this gets challenged in court at some point. The rules went into effect on September 28, 2001 as a knee-jerk reaction to the dot bomb and 9/11: http://www.finra.org/investors/day-trading-margin-requiremen... The real story is that the plebes realized they could make 2% per day by day trading and selling short. I did this with my dad and we were up about $40k before 9/11 wiped out most people's gains (this was…

Indeed these rules are yet another way to gatekeep wealth. They are essentially welfare for the already rich, who can buy their way out of regulation via the fact they already own money.

Re: Robinhood launches 3% checking account

#330

Post by sand500 » Thu, Dec 13, 2018, 7:04 PM UTC

count wrote: post #315

flexie wrote: post #284

This whole checking account / savings account, credit card/ debit card system that Americans have to deal with is so cumbersome and backwards. For Europeans that don't know: Most Americans have (at least) those two accounts, and those two cards. They usually spend from their checking account with their credit card, and save on the savings account. When they spend on their credit card, they sometimes "earn" points, de…

This is a flawed view of the American system. Credit and Debit cards are different things. Debit cards are the European style 'put in a pin and money is debited directly from your bank checking account'. Credit cards are a revolving line of credit from a bank - you're spending against the LOC, and settle up on a monthly basis (to some extent - there's interest and pay-over-time involved in most as well). The differen…

Don't forget fraud protection on a credit card vs debit card.