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Earlier quoted context omitted.
It looks like both FDIC and SIPC have a 250K protection, are there any other differences between the two that would matter to an average consumer?
Does this mean it's not smart to store more than 250k in robinhood? (I don't, just wondering)
3% on checking sounds too good to be true. What's the catch? For example, I didn't see anything about how funds are insured. If Robinhood were to somehow lose depositor funds, what recourse would account holders have?
They're SIPC insured (like a brokerge account) instead of FDIC insured (like a bank account) which is a subtle difference and ever-so-slightly riskier for the consumer but not terribly different.[1] The biggest/riskiest difference is that the insurance here is provided by a group-funded non-profit as opposed to the federal government.
But mostly it's about making up the difference with your data.
[1]https://www.schwabmoneywise.com/public/moneywise/essentials/...
I've using their brokerage services -- no fee on stock and option trading -- and I'm ready to move my primary ETrade account to Robinhood soon. Capital One currently offers 5-yr CD for 3.15%. I just signed up for Citi Priority to save a few pennies on "foreign transaction fees," but it pays paltry 0.03%. That 3% sounds to good to be true, but it's probably not impossible.
Its not too good to be true. These are simply the effects of true non crony capitalism at work. Decentralisation of everything is forcing the crony status quo capitalistic system to change, thus pushing the boundaries of progress further than before. This is simply the beginning.
Earlier quoted context omitted.
I guess I'm a bit naive, why is this?
Interest rates for banking accounts for quite some time have been low. 3% is very high for the USA so it' s a pleasant surprise for many people.
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.
BOA interest rates will probably rocket up from .02% to .03% when the prime rate goes above 6%
Maybe I'm doing it wrong but the "no foreign transaction fees" is just as exciting. Using my BofA card on trips always results in a welcome home set of charges I could do without.
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?
... they are paying out money to the depositor instead of the shareholders
Is it FDIC insured?
Is it FDIC insured?
They aren't part of FDIC but they have SIPC insurance https://support.robinhood.com/hc/en-us/articles/360001469903 Is my money insured? Your cash in Robinhood is insured up to $250,000 by the Securities Investor Protection Corporation (SIPC). SIPC protects cash deposits in your account in the unlikely event that Robinhood fails. Up to what amount? SIPC insurance covers your checking, savings and investments. Your cas…
So no coverage against, i.e. fire, flood, robbery or embezzlement [2]. The first 3 may not be relevant with digital bank that doesn't handle cash, but the last one might be.
EDIT: I misread the second reference. apparently FDIC does not insure against theft or embezzlement, but according to the first link FDIC does provide blanket coverage unlike SPIC. it's still not clear to me what blanket coverage means in this instance.
[1] https://www.schwabmoneywise.com/public/moneywise/essentials/...
[2] https://www.fdic.gov/consumers/consumer/information/fdiciorn...
