Amazing how a company less than a decade old is making history, you have a company literally changing the entire market environment. They continue to make waves in an industry that if the competition was smart enough could have been just like Robinhood...free stock trading, free access to 75,000 ATMs and now 3% checking and savings accounts. This will easily add 3-4 million more accounts by the second half of 2019! Watch how quick banks start offering 3% or even 3.25% after this amazing news. You don't even have to lock your money into a CD at 2.5% for 3 or 5 years!! Im moving my money ASAP to robinhood for 3 %!!! Robinhood, the start-up upending stock trading, goes after banks with 3% checking and savings accounts Popular online stock-trading platform Robinhood is offering checkings and savings accounts with an interest rate that’s roughly thirty times higher than the national average. “Robinhood Checking & Savings” accounts have no fees or account minimums, building off of the company’s free stock-trading model that ushered in 6 million users and a $5.6 billion valuation in its five-year existence. The company is launching a new app on Thursday that will house its stock trading alongside the checking accounts. https://www.cnbc.com/2018/12/13/robinhood-goes-after-banks-with-checking-and-savings-accounts.html
3% on demand deposits when 30 year rates are 3.1%? Seems too good to be true but if the accounts are insured it's free money.
That's exactly what I said ....that's why I'm amazed. I'm sure the accounts are insured. I don't think they would offer such an interest rate without insuring the account up to $250,000!!
Is Robinhood a bank? If something's too good et. al.: https://www.doctorofcredit.com/robi...ecking-and-savings-account-no-fdic-insurance/ Basically, Robinhood is taking your money and investing it while giving you a steady 3% return. Funds are not FDIC insured. It’s just the weight of the company standing behind it. As I see it, if the market tanks, it’s entirely possible Robinhood could go under (if there are enough deposits on hand to sink them) and you’ll lose your money. Personally, I don’t see it worthwhile since there are FDIC-insured options available with rates as high as 2.50% APY, and rates continue to climb. The best application I see for this account is for someone who uses Robinhood anyway and has a chunk of funds sitting and waiting to invest, could make sense to put it in the 3% account meanwhile. We've seen all this before, both before regulations (in history books) and after regulations abolished.
As far as I can tell the accounts will be SIPC insured for 250k, as are cash balances in any brokerage account.
Let's not forget the story of IndyMac Bank of Pasadena, they were offering higher rates i.e. do your homework... http://www.pasadenanow.com/main/10-...k-as-financial-meltdown-of-2008-grips-nation/
SIPC only "protects brokerage firm accounts that are holding cash for the purpose of buying and selling securities." They are marketing these as checking and savings accounts. Are they excluded? Robinhood is a member of SIPC, but they are not FDIC insured. If they did go under, would SIPC claim these are not securities accounts? I'll take a pass, but it will be fun to watch. For those that do take a leap with them, I hope it works out for you.
"I'm sure the account accounts are insured"...do you have a link/documentation on this statement ? RH is not a bank so it is not FDIC insured. SPIC is for brokerage account holding not checking/savings accounts. So unless they have somehow categorized these as brokerage holdings they will not be SPIC insured. In either case SPIC is not the same level insurance/protection as FDIC.
From the article- “But there’s an important distinction between what the start-up is offering and a traditional bank: the Robinhood savings account is SIPC-insured, not FDIC-insured, which means the customer is essentially opening a brokerage account that has different protections.”
I had a 90k CD with IndyMac when they went under. Got a check for my capital and full owed interest back within days of the CD maturing Never had to call or contact them at all. I used to watch all those dopes standing for hours outside the bank to withdraw their funds. Made no sense. That’s exactly what FDIC was made for.