Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#451

Post by sdinsn » Thu, Dec 13, 2018, 9:29 PM UTC

snowwrestler wrote: post #189

zeroname wrote: post #144

Earlier quoted context omitted.

I don't think understand that correctly. There's no such thing as a SIPC-protected checking account that holds securities. A checking account holds cash. There's SIPC protection for your cash and securities (stocks etc.) that Robinhood holds for you, up to 250,000$ each. For obvious reasons, the value of a security in dollars fluctuates and therefore such losses cannot be insured. What is being recovered is the secur…

> It's not the cash/securities that Robinhood holds as part of their business, it's the one they hold for you. You may well choose to hold 100% cash or 100% securities. If I'm holding 100% securities, a) SIPC offers me no protection from losses, b) I better be making more than 3% return, and c) I would not call that situation "a checking account."

Robinhood's checking account only holds your cash, just like any other checking account. I'm not sure why you think you can hold securities in a checking account, or why you keep calling it a "checking" account. It's just a normal checking account, FDIC and SIPC are the same protection when you are holding cash.

Re: Robinhood launches 3% checking account

#452

Post by myroon5 » Thu, Dec 13, 2018, 9:30 PM UTC

xivzgrev wrote: post #424

I love how this is breaking the mold, paying 3% on checking. But when you look at it, it's actually not particularly useful. You want to put money in, and take money out right? In this account, you basically can only withdraw money in 3 ways: 1) use their debit card (inc ATM) 2) transfer money out to a bank via their brokerage account 3) have them mail a check (up to $2500 per day) This excludes all sorts of common u…

How do you know it cannot be used for Venmo? It has a debit card and you can use debit cards for free on Venmo

Re: Robinhood launches 3% checking account

#453

Post by fermienrico » Thu, Dec 13, 2018, 9:30 PM UTC

stupidbird wrote: post #443

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…

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.

Stocks are traded everywhere in the world. What’s this have to do with The American Dream!?

Re: Robinhood launches 3% checking account

#454

Post by tialaramex » Thu, Dec 13, 2018, 9:33 PM UTC

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…

> Are financial firms likely to be bad at math?

No. But you don't have to be bad at maths to play exploitably.

Many years ago now I was a hand-to-mouth graduate student. New credit card companies wanted to attract customers so they offered an easy approval card with 0% finance for 18 months. Need to use some of your new credit on existing debts? Rather than figure out all the specifics they just included a cheque book with the product, just write a cheque to pay any debts and it goes on your 0% balance.

Everybody I knew took out a card, write the full credit amount on a cheque, paid it into a fixed term savings account.

Account term ends, you pay off the 0% card, keep the interest, cut the card in half and you're done. Free money.

The people who ran those new card companies knew this might happen, they just didn't guess it would happen often enough to ruin them. Not our problem. A few years later the deals on offer explicitly did not have a way to cash out. Lesson learned.

Re: Robinhood launches 3% checking account

#455

Post by stcredzero » Thu, Dec 13, 2018, 9:35 PM UTC

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…

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

There are still banks who are trying to do this. You can rephrase it as, "lending money to winners." Even better if you can lend money to an underdog winner, enabling them to borrow even more in the future. Community banks are now left with only the underdog borrowers, as the low hanging fruit is swept up easily by the megacorporation banks.

Metacomment: geeks who believe they have outmathed a financial firm should ask themselves "Are financial firms likely to be bad at math?" and "Are financial firms incapable of hiring their own geeks?"

This is the POV of my wife, who manages underwriting: Community banks are having problems hiring the "A-Students" and "B-Students." This means that employees either make more mistakes, or need more rigorous support through custom software, which community banks can ill afford, and where the big megacorporation banks can handily outcompete them.

Re: Robinhood launches 3% checking account

#456

Post by bitxbitxbitcoin » Thu, Dec 13, 2018, 9:39 PM UTC

kevin_thibedeau wrote: post #299

y-c-o-m-b wrote: post #100

There is a wait-list of more than 45,000 people when you sign up for the checking. An email is sent out after you register and it says the feature arrives in early 2019.

But they're claiming each card design is in "limited" supply with ~650K each. Something doesn't make sense there. If they can't process 45K signups why have 3M cards up for grabs?

Because plastic is cheap!

Re: Robinhood launches 3% checking account

#457

Post by bitxbitxbitcoin » Thu, Dec 13, 2018, 9:39 PM UTC

y-c-o-m-b wrote: post #100

There is a wait-list of more than 45,000 people when you sign up for the checking. An email is sent out after you register and it says the feature arrives in early 2019.

It's at over 200k now.

Re: Robinhood launches 3% checking account

#458

Post by woolvalley » Thu, Dec 13, 2018, 9:40 PM UTC

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…

In America, I don't think contactless matters that much currently.

It's really a crap shoot if any specific retailer supports contactless, no major metro system that I know of support direct debit / credit contactless cards and no major bank or credit card company issues contactless cards.

If you want to use contactless in america, you add the card to apple / google / samsung pay and use your phone for NFC payments. I get a feeling that america will do a 'leapfrog' in contactless and go directly to smartphone only contactless cards than ever issue a contactless card in the mass market.

Re: Robinhood launches 3% checking account

#459

Post by sand500 » Thu, Dec 13, 2018, 9:40 PM UTC

snowwrestler wrote: post #406

sand500 wrote: post #330

Earlier quoted context omitted.

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

Is there a difference? Last time I checked, my debit card offered the same protections my credits cards do.

In addition to what the other commenter said, I think in practice, doing a chargeback is a lot less painful than calling you your bank and asking for your money back. Of course definitely depends on bank and credit card issuer.

Re: Robinhood launches 3% checking account

#460

Post by nrmitchi » Thu, Dec 13, 2018, 9:46 PM UTC

jVinc wrote: post #440

doctorpangloss wrote: post #344

Earlier quoted context omitted.

> 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.

Why wouldn't trading be for morons? Should we also limit loans to people who have a specific minimum IQ or do we live in a free society?

Maybe not based on that metric, but is it really unreasonable to limit loans to people who have demonstrated that they have the ability to understand the terms that they're agreeing to?