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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#491

Post by jdmichal »

FlimGrimoire wrote: post #481
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…

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?" Ah yes, because as 2000, 2008, and 2019 have shown us, financial firms are infallible when it comes to maths and economics.

At least 2008 had nothing to do with being good or bad at math. In fact, it kind of happened because of some rather fancy math. This article has been posted on HN multiple times:

https://www.wired.com/2009/02/wp-quant/

Re: Robinhood launches 3% checking account

#492

Post by hartator »

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…

Had a very different experience. Monthly fees in EU, fraud is usually on you on EU debit cards, and investemt options are more limited.

Re: Robinhood launches 3% checking account

#493

Post by winter_blue »

xster wrote: post #470
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…

And Canada has another slightly in between device that's super useful and mostly inaccessible in the US. Going negative in an easy to transact, straightforward pay-for-amount-and-duration-of-debt from your bank has no US equivalents. Having an unsecured line of credit along with your checking account is extremely convenient if you generally try to invest your savings and very occasionally need to go under temporarily…

Charles Schwab Bank[1] has something similar called an "Overdraft Line of Credit". You can overdraw your checking account, up to the line of credit amount (which can be as high as $10,000). There are no overdraft fees. You just pay a relatively-high interest, which for me is 13.99%. Nothing else. No catches, no hidden fees or surcharges.

No other U.S. bank that I'm aware of offers this feature. This feature is fairly hidden on their website. I read about it somewhere, and asked about it through their chat. The gave me a link to a PDF application form. I had to print out the PDF, fill it out with a pen, and mail it out (you can't apply online). I was approved a week or two later.

[1] It's the Bank that offers this -- not the brokerage service of Charles Schwab. There's a second overdraft service offered through Charles Schwab itself -- this overdraft service is a margin loan secured by equities in your brokerage account. You can actually combine both overdraft services. The Schwab Bank Overdraft Line of Credit application form asks which type of overdraft line of credit to use first.

Re: Robinhood launches 3% checking account

#495

Post by wglb »

jcoffland wrote: post #259
abuckenheimer wrote: post #250

Earlier quoted context omitted.

Yes HFT buys trade flow from robin hood because they make more money executing against it but that's not actually to the detriment of the people on the robin hood app. The main way HFT firms make money is by making a market, they offer to buy and sell stocks cheaper than anyone else and get paid by people crossing the spread and sometimes exchange fees. The reason robinhood trade flow is valuable to HFT firms Isn't b…

The stock market is a zero sum game. If HFTs are making money then someone else's is losing it. The other traders who's trades are closest are the most likely losers. HFTs will tell you what a great liquidity service they provide but they are doing nothing more than using the equivalent of insider information to skim the cream off the top.

But the zeroes that the HFTs are taking is from the old-line manual market makers, not sellers or buyers.

Re: Robinhood launches 3% checking account

#496

Post by jedberg »

FlimGrimoire wrote: post #481
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…

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?" Ah yes, because as 2000, 2008, and 2019 have shown us, financial firms are infallible when it comes to maths and economics.

> Ah yes, because as 2000, 2008, and 2019 have shown us

Were you trying to sneak in a comment about an impending explosion? :)

Re: Robinhood launches 3% checking account

#498

Post by dzhiurgis »

woolvalley wrote: post #458
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.…

Cashier was shocked when I used my contactless card in middle of SF. She nearly screamed "WHAT DID YOU JUST DO???". Meanwhile even in smallest villages of Europe no one bats an eye anymore. America is bizarre!

Re: Robinhood launches 3% checking account

#499

Post by roguecoder »

FlimGrimoire wrote: post #481
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…

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?" Ah yes, because as 2000, 2008, and 2019 have shown us, financial firms are infallible when it comes to maths and economics.

Also, if you've read any of the stories about digitization in financial firms, they are totally incapable of hiring their own geeks because it would displace very, very rich people who would have to do the hiring.

Re: Robinhood launches 3% checking account

#500

Post by icedchai »

yclept wrote: post #483
icedchai wrote: post #393

Earlier quoted context omitted.

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...

Would you really move your emergency funds into a less secure more likely problematic service though?

I would have to read up on the transfer times. If it's reasonably standard (2-3 days) and doesn't have any daily limits, then yes. It's a US company, FINRA approved, SIPC insured, so the risk is minimal.
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