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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#441

Post by ikeboy »

talltimtom wrote: post #324
ikeboy wrote: post #242

Earlier quoted context omitted.

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....

Because it makes it easy to calculate how much is distributed. Just take the annual rate, divide by number of periods, and multiply by the amount of principle.

Re: Robinhood launches 3% checking account

#442

Post by danellis »

deminature wrote: post #252
fullshark wrote: post #232

Earlier quoted context omitted.

Agreed, they are trying to buy customers, if it turns out that they can't convert these customers into traders they will lower the rate to a breakeven amount and not care if they lose those accounts.

Perhaps true, there's been an opening for a 'cool' millennial-oriented financial institution for a while now, so perhaps fewer customers will drop off than expected.

> there's been an opening for a 'cool' millennial-oriented financial institution for a while now

I think Simple was supposed to be that. I wonder how they'll respond to this, given that they only recently moved to 2% ($2k minimum).

Re: Robinhood launches 3% checking account

#443

Post by stupidbird »

asdff wrote: post #327
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…

The average person is more likely to lose money day trading than gain (especially considering the time sink). It's basically boring slow gambling wrapped in the guise of The American Dream.

Re: Robinhood launches 3% checking account

#444

Post by krn »

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 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.

Monzo is a licensed bank in the UK, and Revolut is not.

Still, Revolut has about 30% more customers in the UK than Monzo, and about 3x more in total, since it's available in the entire EU. And, unlike Monzo, which is still losing money, Revolut has been profitable since February 2018.

That's because Revolut does much more than Monzo. It provides multiple premium account types, virtual credit cards for online payments, business accounts with open API access, credit, insurance, and soon – fee-free stock trading like Robinhood.

Re: Robinhood launches 3% checking account

#445

Post by soupsranjan »

philip1209 wrote: post #435
kevindong wrote: post #341

Earlier quoted context omitted.

> 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 love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not an emotional one. The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). To make a checking…

> The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher).

I think the converse is true. Card issuers earn 1 percent points higher interchange rates on credit cards (2.60%) than debit cards (1.60%).

Re: Robinhood launches 3% checking account

#446

Post by Derek_MK »

sonnyblarney wrote: post #264
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" Also using the ridiculously upside down moral convention that they are somehow 'the good guys defeating the system' i.e. 'Robin Hood'. "We wanted to do something after occupy Wall Street, you know. Something real. So, how about, get all the young people to, you know, put their money into Wall Street" is basically their 'storyboa…

Yeah, the younger crowd doesn't trade, not because "the maaaan" is keeping them from it, but because it's a very complicated way of making money, and they typically don't want to learn how to do it right. What this startup is doing is telling the younger crowd that it's the former, while also saying "Look how easy this is!" and deliberately oversimplifying complex systems.

Re: Robinhood launches 3% checking account

#447

Post by Derek_MK »

Apocryphon wrote: post #410
jkqwzsoo wrote: post #343

Earlier quoted context omitted.

The people in r/wallstreetbets usually understand that they're making stupid bets. OTOH, r/Robinhood is full of completely irresponsible traders -- trading in illiquid securities, dumping tons of money in penny stocks, triggering PDT restrictions and getting stuck with unwanted positions, not understanding bid/ask/mark (usually blaming RH or the "market maker" boogeyman for changing the price on them), buying OTM wee…

Given the millennial user base, they probably were.

Eh, they're actually going for both millenials and younger. A lot of their advertising is in YouTube ads and YouTube podcasts, which is definitely aimed at a younger audience than millenials.

Re: Robinhood launches 3% checking account

#448

Post by gregw134 »

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...

Larger brokerages have the same problem. I've lost money using Fidelity twice because their site was down for an hour.

Re: Robinhood launches 3% checking account

#449

Post by matwood »

OscarCunningham wrote: post #414
matwood wrote: post #313

Earlier quoted context omitted.

Day trading is not some magical way to profit. Most people who make money around day trading are selling day trading services. Few make money over the long term day trading, and even fewer (any?) are making 2% every single day (400% over the course of a year with ~200 trading days). The rules were put in place to protect people from being lured into day trading by day trading service companies. The thought was to pre…

A gain of 2% a day over 200 days actually compounds to 5148%, not a mere 400%.

True. I was trying to give some benefit of the doubt, since 2%/day compounded is obviously ridiculous.

Re: Robinhood launches 3% checking account

#450

Post by xxpor »

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…

Who would challenge it? FINRA is a private organization, and I'm sure the SEC or FTC has no interest in trying to get them to change that rule.
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