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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#671

Post by brobinson »

parent5446 wrote: post #624
brobinson wrote: post #501

Earlier quoted context omitted.

Schwab is excellent. Their "high-yield" (lol) investor checking/brokerage account is a good offering due to no minimums, unlimited foreign ATM fee rebates, unlimited checks, etc. Their customer support is amazing. Three rings and a human picks up the phone. My direct deposits go there, but I moved all my investments over to Interactive Brokers since Schwab doesn't offer (to my knowledge) portfolio margin and Schwab's…

FWIW, Schwab does have portfolio margin, although I have no idea what the rates are.

Good to know, but AFAIK portfolio margin doesn't give you different margin _rates_ anywhere... Schwab is almost 10% starting vs IB's 3.6% right now

Re: Robinhood launches 3% checking account

#672

Post by toastermoster »

notyourday wrote: post #559
Scoundreller wrote: post #522

Earlier quoted context omitted.

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

If the SPIC fails to cover the cash balances to the coverage limits, the financial world as we know it stopped existing. This are cash balances, not money market funds or any other funds.

Apparently the president of the SIPC stated that Robinhood didn't contact the SIPC before making their announcement. The SIPC president Stephen Harbeck is on record saying that "SIPC protects cash that is deposited with a brokerage firm for one limited purpose... the purpose of purchasing securities. Cash deposited for other reasons would not be protected. SIPC does not protect checking and savings accounts since the money has not been deposited for a protected purpose."

He later stated that the SEC would need to take the lead on clarifying the matter though.

I have a one-year emergency fund with Robinhood that is invested in index funds (secondary emergency fund as the primary emergency fund is in cash). I think I'll keep my primary emergency fund in the PNC high yield savings account for now until all that gets worked out.

Re: Robinhood launches 3% checking account

#673

Post by vec »

quickthrower2 wrote: post #585
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…

Geeks can and do outmath financial firms and even bookmakers and casinos. The financial firm, bookmaker and casino just needs to outmath the 99.9% of customers who are not trying to beat them to win, and evict the 0.01% of customers whose outmathing is so good it is causing them problems.

How much are you willing to gamble on the prospect that you're in the top 0.1%? And before you answer, consider that you haven't been evicted so you're obviously not in the top 0.01%.

Re: Robinhood launches 3% checking account

#674

Post by cjensen »

hn_throwaway_99 wrote: post #612
cjensen wrote: post #381

Earlier quoted context omitted.

The FDIC is part of the government and the government owns a printing press. You WILL get your money back. No private insurance company can provide such guarantees and keep then if the entire sector needs to be bailed out at the same time.

I don't understand this. SIPC is a federally-mandated corporation, not a private insurance company.

Right. They don't have the same level of commitment from the US government.

SIPC is like Fannie Mae, where the US implies a backing without making a promise. When push comes to shove the US Government gets to choose whether to do a bailout on a case-by-case basis.

FDIC is not like that at all. The US explicitly and unconditionally backs them.

Look at it in political terms. FDIC is guaranteeing everyone's savings, rich or poor. You just can't let that fail. SIPC is guaranteeing a bunch of investments. If the class in power takes a dim view of bailing out a bunch of "wealthy speculators", the ball can definitely be dropped.

Re: Robinhood launches 3% checking account

#675

Post by stupidbird »

guelo wrote: post #649
stupidbird wrote: post #548

Earlier quoted context omitted.

The American Dream is to accumulate wealth, and often involves looking for a way to get rich quick, some people think they can do it by day trading. There's a certain American stereotype of playing stocks to become wealthy.

There are cultures where they don't dream about accumulating wealth?

Less than the extent that Americans do? absolutely. In many ways they're obsessed with it. Look how much the gambling industry makes there.

Re: Robinhood launches 3% checking account

#676

Post by guelo »

stupidbird wrote: post #675
guelo wrote: post #649

Earlier quoted context omitted.

There are cultures where they don't dream about accumulating wealth?

Less than the extent that Americans do? absolutely. In many ways they're obsessed with it. Look how much the gambling industry makes there.

Macau's gambling revenue dwarfs Las Vegas's. None of the top 10 biggest money making casinos are in the United States.

Re: Robinhood launches 3% checking account

#677

Post by Shorel »

te0x wrote: post #613
Shorel wrote: post #286

Earlier quoted context omitted.

In Colombia we have the USA system. Yes it seems arbitrary and backwards, and banks love to earn fees. Each credit card is another monthly fee, and you can't do international (Netflix) purchases without one.

That sounds awful, and nothing like what we have in the US.

I mean of course the two card (debit and credit) system.

In contrast with the EU (single card) system.

Yes, it is awful.

Re: Robinhood launches 3% checking account

#678

Post by theartfuldodger »

pascalxus wrote: post #439
mikeash wrote: post #218

Earlier quoted context omitted.

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…

here the catch, I believe: 1. it's ensured by SIPC, not FDIC, so it's not as safe. 2. They're going to lower that 3% rate down whatever all the other banks are at (2%) in a couple of years, unless the interest rates catch up to their higher rate, which they are expected to do in about 2 to 3 years: at that time, 3% will be roughly the norm for the highest interest savings accounts. I remember the days when Citibank w…

At this time it is not insured. The SIPC openly stated this.

The product is already being renamed as a "money management fund"

Re: Robinhood launches 3% checking account

#679

Post by theartfuldodger »

nodesocket wrote: post #425
TuringNYC wrote: post #415

Earlier quoted context omitted.

No one knows what Robinhood will do, but no bank can promise a perpetual 3% rate. The rate is probably a teaser. Even if it is perpetual, it may be "on the first $10,000, with a minuscule rate on larger sums...something that allows them to advertise 3% but offer much less on larger sums.

Their FAQ states no caps, though it can vary depending on what the fed does with rates. With the current 2 year treasury being 2.76%, they must making money on fees. I am seriously considering moving my savings from a Capital One money market account that earns 2% to this that earns 3%. That extra percent is decently significant.

You should look into their recent problems. Locking option traders out of their accounts ( potentially millions lost)

They have no customer service and a decently easy collection of horror stories related to their lack of customer service.

Re: Robinhood launches 3% checking account

#680

Post by theartfuldodger »

rootusrootus wrote: post #590
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…

To be fair, RH does sometimes have problems. They blew up the other morning and screwed over a number of people by closing their accounts for the day while they tried to figure out how their system credited them with options sales at 10-100x actual value. RH has definitely got bugs, and if I were serious about playing the market I'd go with IB or TW, or just about anyone else.

That number of people is quite large. Between FB groups, reddit and Twitter comments it definitely exceeds the hundreds.

I was locked out for 29 hours with expiring strangles that would have had significant upside if closed at the right time, lost everything put into them by the time I could get back in.

Never received communication about the lock out or being allowed back in.

They have no phone support and during that whole period not a single email was responded to.

To imagine this company as a bank is one of the most ridiculous concepts ive heard of.

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