Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#561

Post by sandworm101 » Fri, Dec 14, 2018, 1:25 AM UTC

zem wrote: post #533

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?" reminds me of the first time i interviewed at google, and one of the interviewers asked "if you could set up your own project and get a team to work on it, what would you do?". i answered that i would get a bunch of m…

>> people who were both smart and educated might nonetheless go into a shady and declasse activity like running spam sites.

The crooks I've met have been the smartest and most insightful people I've met in tech. I know one guy who, after years with a CC scam operations when to work for an online merchant. His knowledge of payment systems and payment processor policies was encyclopedic. The big issue was whether he was trustworthy. Lucky he had never been convicted of anything.

Re: Robinhood launches 3% checking account

#562

Post by pishpash » Fri, Dec 14, 2018, 1:27 AM 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…

Still, 3% is not just a little loss, it's a big loss. This is into the low end of the reward checking range which comes with lots of strings attached. It doesn't matter if they think they're targeting millenials, once the word is out it will be exploited to the extreme, and it's either going to end in a few months or there will be severe capacity limits so that you can't just park money there. You can bet on that.

Re: Robinhood launches 3% checking account

#563

Post by tryptophan » Fri, Dec 14, 2018, 1:29 AM UTC

SEJeff wrote: post #14

As a user of the Robinhood brokerage for all of my "fun investment money" I'm a fan of this. I do wonder how the big banks are going to respond however as this is blatantly a "shots fired" kind of event.

I bet they wont respond at all. Nobody keeps serious money(that banks would care about) in a checking account lol.

This is just marketing to attract the millennial crowd and get them to gamble their money away on stocks(benefiting robinhood of-course).

Re: Robinhood launches 3% checking account

#564

Post by hakfoo » Fri, Dec 14, 2018, 1:30 AM UTC

09bjb wrote: post #297

mcv wrote: post #161

Earlier quoted context omitted.

So what does that mean here? Are you saying that the part of your money that the bank uses to invest, is not insured? If so, then what does the insurance for the remainder even mean? Money that the bank doesn't touch doesn't need to be insured, because it's always there. The whole point of such an insurance is to reimburse you in case the bank loses your money due to their bad investment. If that's not covered but on…

My understanding is that yes, you're not covered if the bank suffers losses and passes them on to you. The entire industry is one giant moral hazard due to complete lack of skin in the game on the part of the banks. They don't own the money and aren't responsible for catastrophic losses (see the '08 and previous bailouts), but they control it and keep the upside. You're right, that insurance sounds like garbage, but…

I think the loss case they're protecting you for is more

"I bought 100 shares of Acmecorp, then Robinhood shuttered their doors and said they sold the shares to fund their yacht."

The SIPC's job there is to reimburse you for 100 shares of Acmecorp as of now; they're not going to let investors cherry-pick and say "but they mishandled the account during the one day it was at its peak and I want that price!"

Re: Robinhood launches 3% checking account

#565

Post by tryptophan » Fri, Dec 14, 2018, 1:32 AM UTC

dangrossman wrote: post #403

coryfklein wrote: post #375

If you're looking for a good liquid place to park cash and you don't have a Robinhood invite, check out Dollar Savings Direct. They currently pay 1.8% interest on their savings accounts.

Synchrony Bank, Goldman Sachs Bank, Barclays Bank, HSBC Direct pay 2.05%. Ally Bank, American Express National Bank, Discover Bank pay 2%. Google "high yield savings" for lists that are updated monthly. However, this Robinhood offer is for a "checking" account, which while not actually a checking account, still offers the liquidity of one. Savings accounts have a limited number of monthly transfers you're allowed, an…

Or even better, open a brokerage account with checking functionality, and put it all in a money market fund yielding ~2.15%, which also will automatically increase rates with about a month lag to any increases the fed does.

Re: Robinhood launches 3% checking account

#566

Post by pishpash » Fri, Dec 14, 2018, 1:33 AM UTC

mikeash wrote: post #218

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…

Why would they expect this account to be used as a high-velocity, low-balance account rather than a park-your-savings account, given the rate? I agree that the high rate is reasonable in that scenario, but the high rate is also actively fighting to ensure that scenario doesn’t happen. I don’t see people here thinking that Robinhood is bad at math. They’re all asking, “what’s the catch?” Because it sure seems like the…

The catch is soon there will be a maximum balance or activity requirement, or something to that effect, all of which are not contradicted by their PR sheet. It's otherwise utterly unsustainable.

Re: Robinhood launches 3% checking account

#567

Post by dclusin » Fri, Dec 14, 2018, 1:39 AM UTC

sandworm101 wrote: post #561

zem wrote: post #533

Earlier quoted context omitted.

> 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?" reminds me of the first time i interviewed at google, and one of the interviewers asked "if you could set up your own project and get a team to work on it, what would you do?". i answered that i would get a bunch of m…

>> people who were both smart and educated might nonetheless go into a shady and declasse activity like running spam sites. The crooks I've met have been the smartest and most insightful people I've met in tech. I know one guy who, after years with a CC scam operations when to work for an online merchant. His knowledge of payment systems and payment processor policies was encyclopedic. The big issue was whether he wa…

For every criminal savant there's probably at least 10 script kiddies exploiting older people, prostitutes, and every other vulnerable group imaginable.

Re: Robinhood launches 3% checking account

#568

Post by Scoundreller » Fri, Dec 14, 2018, 1:41 AM UTC

yorwba wrote: post #540

Scoundreller wrote: post #522

Earlier quoted context omitted.

I’m sure they said that about Cyprus and Iceland too.

As far as I can tell, the coverage amount of 100,000 euros was respected in these cases, probably precisely to avoid doubts like that about the safety of deposits.

The UK and Dutch depositors in the Icelandic banks got bailed out by the UK and Dutch taxpayer.

Iceland's government/deposit insurance did not pull through.

Cyprus wasn't much different either.

https://www.telegraph.co.uk/finance/financialcrisis/11877219...

https://www.telegraph.co.uk/finance/financialcrisis/9965943/...

Re: Robinhood launches 3% checking account

#569

Post by c1b » Fri, Dec 14, 2018, 1:45 AM UTC

JamesBarney wrote: post #482

FlimGrimoire wrote: post #481

Earlier quoted context omitted.

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.

2000/2008 didn't happen because someone did basic accounting math incorrectly.

I think you could argue that the rating agencies did the math incorrectly, at least in 2008.

Re: Robinhood launches 3% checking account

#570

Post by anonu » Fri, Dec 14, 2018, 1:47 AM UTC

picodguyo wrote: post #19

This is higher than even most long-term CDs at the moment. Anyone have thoughts on how this is possible? Possibly a teaser that will adjust down soon?

Exactly the correct point... it's not possible. You have to keep your money in there for a while (minimum thresholds)- there are probably caveats that you need to turnover a certain % of your Mastercard (since part of that 3% is on chargebacks). short term (1 year) treasuries are yielding 2.7%... so the only way to get 3% is to take more risk. Risky proposal to park your money with robin hood.