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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#371

Post by eeeeeeeeeeeee »

elithrar wrote: post #130
SnowingXIV wrote: post #51

Earlier 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…

Yep, I use Bettement for index funds and their “smart saver” idea is absolute trash. It’s a shady marketing term that is likely going to hurt a lot of people eventually. I don’t even really understand the appeal when most high yield savings accounts give you 2% now (I use Amex FSB).

Re: Robinhood launches 3% checking account

#372

Post by hnthrowaway2293 »

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?

The catch is that when Robinhood goes bust because of the risky investments they're making to get you that 3% yield, and they take the SIPC down with it, then the government bails out the SIPC and Robinhood you lose purchasing power through currency devaluation.

Re: Robinhood launches 3% checking account

#373

Post by stevewodil »

doctorpangloss wrote: post #344
asdff wrote: post #327

Earlier quoted context omitted.

> 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…

> Trading for most people used to be deliberately obtuse. When Robinhood initiates options trading by asking you, "Do you think the stock is going to go up?" on a phone interface, they've decided that trading is now just for morons.

Hahaha, I love this comment because when I'm trying to buy options it always makes me chuckle how they allow these type of people to trade naked options

Re: Robinhood launches 3% checking account

#374

Post by SaintGhurka »

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…

"Generally speaking, it's a hassle to transfer money to people you know and fees are hefty."

This hasn't really been true for a long time. Most banks participate in Zelle, which lets you transfer money for free to just about anyone via your phone. Every national or regional bank I can think of is a member. Venmo also does this.

"in America, you regularly spend time on the phone talking to robots and objecting to expenditures you didn't make"

Regularly? I am a heavy credit card user and I've had a card compromised once about 10 years ago. I talked to a human at the bank to clear it up and they had a new card in my mailbox the next day.

The whole "points" thing is an oddity, I'll grant. But we're used to it and it's highly advantageous to the consumer if you pay off your cards every month. It's worth about $1000 per year to me.

Re: Robinhood launches 3% checking account

#376

Post by kevstev »

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.

Eh lets not overstate it too much- this isn't the first time it has happened, paypal and a few other "internet banks" back in the early-mid 2000s was offering 5% interest rates when big banks weren't offering much. The big banks are as strong as ever.

Generally, you really shouldn't be keeping much in a bank anyway, invest most of your money, even if only in ultra safe bonds.

Re: Robinhood launches 3% checking account

#377

Post by snowwrestler »

dunpeal wrote: post #365
graedus wrote: post #340

Earlier quoted context omitted.

> When the return is higher, the risk must have gone up too, somehow. I want to emphasize this point. You are never* getting returns for free, you are getting paid to take on some risk. If someone is trying to sell you "risk-free" returns that are higher than widely-known market rates, they are lying to you by downplaying, omitting or obfuscating the risk associated with those returns, and warning bells should be goi…

> You are never getting returns for free Sure, but you can buy US treasury bills, and then your risk is "lose some money if the US government defaults", which is very low. We all live every day with risks far greater than that risk level. If you look at the current treasury yields, they are very close to 3%. Add the interchange revenue, and RobinHood can pull a 3% guarantee while still making a (narrow) profit. If tr…

If this worked well enough to allow 3% interest on checking accounts, literally every single bank would already be doing it.

Re: Robinhood launches 3% checking account

#378

Post by byproxy »

kevindong wrote: post #341
philip1209 wrote: post #332

I just spent 3 months in London, and it's crazy how Monzo seems to have taken the market. Almost everybody seems to be paying with a Monzo card, regardless of age. Asking around, I consistently heard that Monzo's competitors like Revolut are going to be a future case study in scaling before great product/market fit. I don't know how many people have Revolut accounts, but nobody seems to be using their cards in public…

> My benchmark is Charles Schwab Bank, which offers free ATM fees on any ATM, anywhere. It's what many millennials that I know use. But, it's a bad product and not very user-friendly. Why do you say it's a bad product? I use Schwab as my main account and it works great for me.

I'm also using Schwab as my main account and for the most part enjoy it. It's not as (seemingly) simple and intuitive as the other products philip1209 mentioned, though. It's a well-established bank/brokerage firm, and it shows in the UI.

Re: Robinhood launches 3% checking account

#379

Post by eeeeeeeeeeeee »

superfrank wrote: post #301
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…

That was my impression as well. A bunch of people using a cheapo trading account and now paying the price for being so cheap.

It reminds of when businesses grossing over a million dollars spend $5/month on their hosting and are offended when their site is down.

Re: Robinhood launches 3% checking account

#380

Post by lotsofpulp »

coryfklein wrote: post #368
webninja wrote: post #350

Earlier quoted context omitted.

I’m still up 12% (although down from 30%) in this bull market. The trick to buy an array of better companies and to not sell/trade them. Every trade you make gives the HFT MIT quants an opportunity to take money out of your pocket! Hold at least 1 year for the substantial tax advantage, 2 years for gains to materialize (Peter Lynch’s Advice), or indefinitely as Warren Buffet has advised. Also don’t touch or put more…

> The trick to buy an array of better companies Congratulations, you just reinvented the S&P 500.

Lol, I can't figure out if that comment is satire or not.
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