Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#631

Post by kyllo » Fri, Dec 14, 2018, 6:27 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…

A good answer is, "well yeah, I suppose they probably do have them, but that doesn't mean we should just give up."

Re: Robinhood launches 3% checking account

#632

Post by shrimpx » Fri, Dec 14, 2018, 6:35 AM 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.

And by not day trading you're not gambling? Let's just call it betting. What stance are you promoting that is "not betting"?

Re: Robinhood launches 3% checking account

#633

Post by kevin_thibedeau » Fri, Dec 14, 2018, 7:05 AM UTC

dzhiurgis wrote: post #498

woolvalley wrote: post #458

Earlier quoted context omitted.

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!

It was deployed in the US 10+ years ago but few merchants upgraded to terminals that supported it so contactless died off.

Re: Robinhood launches 3% checking account

#634

Post by antiviral » Fri, Dec 14, 2018, 7:54 AM UTC

Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now?

If they use longer term bonds, they will face potential losses as those tend to be volatile relative to interest rate changes. If they use higher-yielding corporate bonds, they face default risk.

There's something critical that's not being explained here which is important, and I wouldn't want to put my money in something like that without understanding it thoroughly.

Re: Robinhood launches 3% checking account

#635

Post by speedplane » Fri, Dec 14, 2018, 7:57 AM UTC

antiviral wrote: post #634

Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now? If they use longer term bonds, they will face potential losses as those tend to be volatile relative to interest rate changes. If they use higher-yielding corporate bonds, they face default risk. There's something critical that's not being explained here which is important, and I wouldn't want to put my money…

> Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now?

Easy. They're making a calculated decision to lose money on the interest rate, in order to build a relationship and make money on other services.

Re: Robinhood launches 3% checking account

#636

Post by dragonwriter » Fri, Dec 14, 2018, 8:05 AM UTC

antiviral wrote: post #634

Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now? If they use longer term bonds, they will face potential losses as those tend to be volatile relative to interest rate changes. If they use higher-yielding corporate bonds, they face default risk. There's something critical that's not being explained here which is important, and I wouldn't want to put my money…

> Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now?

It's a deal to get more trading accounts opened, both directly (people coming to RH for these accounts, which are not separate from trading accounts) and indirectly (e.g., it's a waitlisted feature that you move up in the waitlist by referring people to RH.)

They don't need to make money on the savings feature considered in isolation.

Re: Robinhood launches 3% checking account

#637

Post by yorwba » Fri, Dec 14, 2018, 8:10 AM UTC

Scoundreller wrote: post #568

yorwba wrote: post #540

Earlier quoted context omitted.

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/...

Your first link doesn't mention the insurance amount at all, the second only talks about deposits beyond the 100,000 euro limit and apparently British customers got an even better deal with the higher limit of £85,000.

Re: Robinhood launches 3% checking account

#638

Post by X-Istence » Fri, Dec 14, 2018, 8:47 AM UTC

shrimpx wrote: post #625

X-Istence wrote: post #535

Earlier quoted context omitted.

The average person shouldn't day trade. I buy stocks and basically hold them for years. I've picked some losers and I've picked some winners... but overall my return over the last ~5 years is 19%. Buying stock with dividends helps even more, now you get money back to invest into more stock :-D

If you just bought s&p or brk (arguably conservative choices) you'd have earned 60%.

Such is the name of the game :-) I have invested relatively little, I just enjoy playing and seeing if I can "win".

Everything else is in index funds.

Re: Robinhood launches 3% checking account

#639

Post by TheCoelacanth » Fri, Dec 14, 2018, 9:01 AM UTC

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.

Those examples happened because of people with the wrong incentives doing math correctly, not because of anyone doing math incorrectly.

Re: Robinhood launches 3% checking account

#640

Post by philip1209 » Fri, Dec 14, 2018, 9:38 AM UTC

hakfoo wrote: post #560

cbdumas wrote: post #504

Earlier quoted context omitted.

What incentive would I have to use a well branded debit card over a credit card that gives cash back?

I could see an effective marketing campaign making debit a social signal. Being able to make a large purchase on debit means you can afford it right now-- just as dropping a stack of $100 notes would signal. In contrast, paying with credit can be a pose-- you look like you can afford the $1000 purchase, but it hides the dark secret that you'll be paying for it well into the next decade.

I think it's also about control and understanding your spending.