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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#391

Post by snowwrestler »

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.

Currency is a tool for measuring economic value, it's not the basis of economic value.

This is why fiat currencies are so useful: you can change the length of the "ruler" to accommodate changes in the thing you're measuring, so the value of the increment remains stable.

Re: Robinhood launches 3% checking account

#392

Post by clintonb »

RobAtticus wrote: post #221
lettergram wrote: post #207

Earlier quoted context omitted.

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…

Perhaps true in the past, but AmEx has recently (I think?) started offering bank accounts. Their high-yield savings account is 2%, which is pretty comparable to Ally, etc. https://www.americanexpress.com/personalsavings/high-yield-s...

American Express Bank has been around for at least 2-3 years.

Re: Robinhood launches 3% checking account

#393

Post by icedchai »

mikeash wrote: post #230
deminature wrote: post #225

Earlier 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.

I'll move my ~$100K emergency fund into there just to get free money. And move it out somewhere else when the rates change. Over the years I've moved accounts between Dollar Savings, Emigrant, Orange, Ally, and probably 2 or 3 others...

Re: Robinhood launches 3% checking account

#394

Post by stilky »

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.

Same here, they also have very good service. 24/7 chat assistance and I haven't waited for more than 30 seconds to be connected to a customer service representative.

Re: Robinhood launches 3% checking account

#395

Post by teach »

jkqwzsoo wrote: post #337
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…

I'm sorry, but your post is completely wrong. If this was an essay on American retail banking, you'd receive an F. > 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. This is not true. A), most Americans do not have two accounts. The card used on your checking account is a debit card, and it d…

> Income is deposited wherever you indicated to your employer. This can be separated between savings accounts, retirement accounts, checking accounts, investment accounts, or even deposited directly to prepaid cards.

As an American, I agree with all of the corrections in your comment except for this one.

I'm willing to accept that your employment history is different than mine but I've never had an employer that supported this and I'd be really surprised if most Americans did.

My employers have given me a choice: paper paycheck or direct deposit of the full amount. Full stop.

Re: Robinhood launches 3% checking account

#397

Post by fokinsean »

dmortin wrote: post #192
snowwrestler wrote: post #95

Earlier quoted context omitted.

Maybe: > SIPC insurance provides protection for your cash balance and securities holdings if Robinhood fails financially, but does not cover investment losses due to declines in the value of securities themselves . Emphasis mine. If you put $250,000 into an FDIC-protected checking account, that account holds cash and FDIC protects the full amount of that cash. If you put $250,000 in an SIPC-protected brokerage accoun…

> If you put $250,000 in an SIPC-protected brokerage account, that account holds both cash and securities So I won't buy any securities, just use it as a checking account, keeping the cash sitting there earning the 3% interest. I wonder if there is a rule of Robinhood which prevents me doing this.

It looks like the checking and savings accounts are brokerage accounts, so if you put money into it then you are buying securities.

I just learned that this is how Betterment's "Smart Saver" account is as well.

> Is Robinhood a bank?

No. Robinhood offers Checking & Savings through a brokerage account and it offers the Robinhood debit card in partnership with Sutton Bank.

Re: Robinhood launches 3% checking account

#398

Post by dixie_land »

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.

Maybe they'll introduce binary options soon.

Imagine on iOS you randomly gets a pop up "do you think gold spot is gonna be above 1250 in 2 hours?" -> long tap the notification directly place an order

Re: Robinhood launches 3% checking account

#400

Post by rabidonrails »

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'm not sure it's even this complicated. They want people to use Robinhood to trade. People need to have cash in their account to do so. Rather than having to wait a day to transfer money they can incentivize you to store your money within Robinhood so that there's no friction to you making more trades.

Similar to YouInvest and Chase.

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