Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Robinhood launches 3% checking account

techcrunch.com

Post reply on HN
Print view View original

381–390 of 684 posts

Re: Robinhood launches 3% checking account

#381

Post by cjensen »

AustinGrandt wrote: post #45
ericliuche wrote: post #29

They are offering this as a brokerage and not a bank so the accounts are not FDIC insured but SIPC insured instead https://support.robinhood.com/hc/en-us/articles/360001469903

It looks like both FDIC and SIPC have a 250K protection, are there any other differences between the two that would matter to an average consumer?

The FDIC is part of the government and the government owns a printing press. You WILL get your money back.

No private insurance company can provide such guarantees and keep then if the entire sector needs to be bailed out at the same time.

Re: Robinhood launches 3% checking account

#382

Post by bytematic »

josteink wrote: post #355

People still have checking accounts? In 2018? And that’s a completely serious question. I literally haven’t seen a check used anywhere the last 25 years. I doubt any place I frequent would accept one. In fact I don’t know a single bank which issues checks... I assume most university students these days wouldn’t even know what a check was, if given one. So where is the market? The past? I mean... you’d need a time mac…

Uni student here. Most people put money in a checking account to use to pay bills/food/etc. You shouldn't be using your savings account money for this.

Re: Robinhood launches 3% checking account

#383

Post by gonehome »

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…

I have everything in Fidelity which seems like it has the same benefits as Schwab, but also with the trading availability and zero fee index accounts (not sure if Schwab has this too).

I had simple for a while and the UI was great, app is best of the ones I've seen but they never had anything else (they recently created a savings account) and no checks got annoying to deal with.

My Bank of the future would have these features:

- Full brokerage account with available trading and zero fee index funds

- Free checks

- Free wiring/ability to send money to other people's bank accounts

- Really good app (like simple's)

- Decent interest like Robinhood has here without having to separate things into a savings account

- No fees

- Credit card to rival Chase Sapphire Reserve or AMEX Platinum with tightly coupled integration into the existing app software.

- All ATMs are free (rarely use, but nice to have and Fidelity does it).

- Ability to get loans

Fidelity has nearly all of these things with some negatives:

- App is not that great/UI is bad

- Their credit card is bad and not well integrated into their software

- Interest is poor

Haven is a new startup that's has a pretty cool approach to helping people do the optimal thing with their money (like an automated r/personalfinance), but I'd rather just be able to do it directly with the people holding the money.

Re: Robinhood launches 3% checking account

#384

Post by dunpeal »

snowwrestler wrote: post #377
dunpeal wrote: post #365

Earlier quoted context omitted.

> 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.

> literally every single bank would already be doing it.

Your typical bank has far more than RobinHood's 300 employees, and far greater expenses in general.

This is an example of a disruption.

Re: Robinhood launches 3% checking account

#385

Post by theturtletalks »

deminature wrote: post #362
rchaud wrote: post #358

Earlier quoted context omitted.

Seems like a weak market to go after, given that people likely to respond to a "cool" financial services brand may be a poorer demographic that maybe doesn't have any prior experience with "legacy" financial services providers. So just because they create accounts @3% doesn't mean they'll also open trading accounts.

Millennials may not have money now, but they'll accumulate more wealth as they get older. If you can convert them now, the friction to changing again is high enough that you'll probably still have them when they're worth something.

Yep that's a good play, but their page says that the 3% can change depending on the market. So if that percent changes a few months after you create an account, I would bet many people would leave cause of the bait and switch.

Re: Robinhood launches 3% checking account

#386

Post by theturtletalks »

jorams wrote: post #308
JoBrad wrote: post #253

Earlier quoted context omitted.

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.

That's higher than index funds returns as of late.

Re: Robinhood launches 3% checking account

#387

Post by jkravitz61 »

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…

I imagine that the demographic they are supposedly going after for debit cards is the same demographic that takes advantage of great credit card deals. I don't see debit cards becoming fashionable as the go-to charge card for reasonably well-off millennials that are eligible for great credit cards. Those that aren't eligible for these credit cards likely have inconsequential amounts of savings anyway...

Re: Robinhood launches 3% checking account

#388

Post by JoshuaDavid »

kyleomalley wrote: post #321
snowwrestler wrote: post #272

Earlier quoted context omitted.

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.

> The stock market is a closed system that currencies feed into

Currencies feed into the stock market, but it's not a closed system. If you think a company is undervalued in the stock market, and you buy shares, that raises the price of shares for that company. With a higher share price, that company can borrow money (by issuing shares) at better terms, and spend that money on growing more than they could have if they had not borrowed that money.

If the stock price is too low, the company may buy back shares of its own stock (thus enabling future borrowing). Alternatively, investors may buy up a majority of the stock of that company, thus acquiring control of that company, and either try to force the company to do a thing they expect to be profitable, or liquidate the assets of the company (which will then be distributed to shareholders in proportion to how many shares they hold).

So basically the stock market moves money to the companies based on how effectively they could spend borrowed money / how valuable they would be if liquidated.

Re: Robinhood launches 3% checking account

#389

Post by manicksurya »

I registered for this and I am in line. To get prior access. I am asked to refer my friends.

Just wondering how robinhood shows all my friends though I have not connected robinhood to any of my social network. I feel this as a big privacy issue and it’s concerning a lot.

Re: Robinhood launches 3% checking account

#390

Post by snowwrestler »

lettergram wrote: post #207
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…

It's also a way they can secure their loans. It's the exact same reason Capital One has bank accounts along with their credit card business (and Amex doesn't). Getting credit on the open market is expensive, by getting you to sign up with your bank account, they can leverage it to get cheaper loans for buying stocks (i.e. margin accounts). Capital One targets lower income people, so it's riskier and more vulnerable t…

Commercial banks also have access to the Fed discount window, which other institutions do not. This is one reason all the big investment banks converted to bank holding companies during the financial crisis.
Post reply on HN