[Robinhood to offer 3% cash management program, not a bank account]

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aristotelian
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by aristotelian »

Morgan Dollar 1921 wrote: Thu Dec 13, 2018 10:56 pm
drk wrote: Thu Dec 13, 2018 10:46 pm Can we get the thread title corrected? These are not checking/savings accounts.
Respectfully, I ask what would you call them then ? TIA
It's the cash management service for their brokerage account. Similar to Vanguard Government Money Market Fund.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by drk »

Morgan Dollar 1921 wrote: Thu Dec 13, 2018 10:56 pm Respectfully, I ask what would you call them then ? TIA
Why should I do Robin Hood's product branding for them? You'll notice that they don't call them checking and savings accounts, either, presumably because they couldn't figure something out that would satisfy regulators without dissuading customers.

I would call them margin lending accounts, though.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by LadyGeek »

Morgan Dollar 1921 wrote: Thu Dec 13, 2018 10:56 pm
drk wrote: Thu Dec 13, 2018 10:46 pm
LadyGeek wrote: Thu Dec 13, 2018 7:41 pm Make that 8. I merged dwickenh's thread into here.
Can we get the thread title corrected? These are not checking/savings accounts.
Respectfully, I ask what would you call them then ? TIA
I took a stab at it. "[Robinhood to launch 3% interest bearing accounts, but is not a bank]"

This thread is now in the Investing - Theory, News & General (fund offering).
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Re: [Robinhood to launch 3% interest bearing accounts like a bank, but is not a bank]

Post by LadyGeek »

I merged HomeBarista's thread into here. (Merge #9 so far.)
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Re: [Robinhood to launch 3% interest bearing accounts like a bank, but is not a bank]

Post by LadyGeek »

ObliviousInvestor's twitter posts have good info. From the Robbinhood fine print (bottom of the page):
Users of Robinhood Checking and Savings earn 3% interest annually on each of their Checking and Savings balances. Robinhood does not charge account maintenance, account minimum, overdraft, ATM, transaction, foreign transaction, transfer, or card replacement fees for Robinhood Checking and Savings. Robinhood Checking and Savings is offered through Robinhood Financial LLC. Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account. The Robinhood Debit Card is issued by Sutton Bank pursuant to a license from Mastercard International, Inc. Neither Sutton Bank nor Mastercard International, Inc. are members of FINRA or SIPC.
As wbrianwhite notes - What SIPC Protects, from the Securities Investor Protection Corporation (SPIC):
SIPC protection is limited. SIPC only protects the custody function of the broker dealer, which means that SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins.

SIPC does not protect against the decline in value of your securities. SIPC does not protect individuals who are sold worthless stocks and other securities. SIPC does not protect claims against a broker for bad investment advice, or for recommending inappropriate investments.

It is important to recognize that SIPC protection is not the same as protection for your cash at a Federal Deposit Insurance Corporation (FDIC) insured banking institution because SIPC does not protect the value of any security.

Investments in the stock market are subject to fluctuations in market value. SIPC was not created to protect these risks. That is why SIPC does not bail out investors when the value of their stocks, bonds and other investment falls for any reason. Instead, in a liquidation, SIPC replaces the missing stocks and other securities when it is possible to do so.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by CaliJim »

I'm not interested in seeking higher returns on my “working capital”. Chasing higher returns = higher risk. Pretty much always

I believe markets are mostly efficient. I’ll let those less risk adverse than I see if this deal is different and risk and return are not tightly correlated.

I am suspicious of loss leaders like this. Takes more than a toaster to get my business. I like my old familiar bank with their mature internal audit and well funded cyber security Dept.

Soon as robin hood gets hacked...what then?
Last edited by CaliJim on Fri Dec 14, 2018 12:34 pm, edited 1 time in total.
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Re: Does the 3% savings at robinhood make emergency funds ladders obsolete?

Post by JustinR »

How are they getting away with such a intentionally misleading marketing campaign?

Is the use of "checking" and "savings" not regulated by any government entity?

They're deliberately misleading consumers to think they're a bank account. Does the savings account have the monthly 6 withdrawal limit?
Last edited by JustinR on Fri Dec 14, 2018 12:01 am, edited 2 times in total.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by Morgan Dollar 1921 »

drk wrote: Thu Dec 13, 2018 11:06 pm
Morgan Dollar 1921 wrote: Thu Dec 13, 2018 10:56 pm Respectfully, I ask what would you call them then ? TIA
Why should I do Robin Hood's product branding for them? You'll notice that they don't call them checking and savings accounts, either, presumably because they couldn't figure something out that would satisfy regulators without dissuading customers.

I would call them margin lending accounts, though.
I have been on Robinhood, prior to finding this forum. I love the knowledge, advice and info here. I just checked again, viewing their app, they are using the wording, "Introducing Checking & Savings" under the introduction tab, on the app. The words "checking and savings" are used several times in descriptions. I am not saying they should or should not call it this, just stating the facts as I see them on their app, as of right now, 11:54 PM EST. The banner to tap to "Learn More" says "Checking & Savings" I agree it is closer to a CMA at Fidelity or Schwab, in the fact it is not FDIC insured. The other thing I do not comprehend is many here balk at the lack of FDIC, then mention their or so-so's MMMF is paying almost as much, 63 basis points difference was the spread in one reply. But wait, that MMMF is not FDIC either right ???

They sure are getting a lot of TOMA (top of mind awareness) advertising here and other places also! I did not refer very many of my contacts and have dropped down 15,687 spots on the waiting list. (30,395) and the total as I wrap this up is 491K in line. No there is no limit on savings withdrawals, another perk I guess.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by drk »

Morgan Dollar 1921 wrote: Thu Dec 13, 2018 11:58 pm
drk wrote: Thu Dec 13, 2018 11:06 pm Why should I do Robin Hood's product branding for them? You'll notice that they don't call them checking and savings accounts, either, presumably because they couldn't figure something out that would satisfy regulators without dissuading customers.

I would call them margin lending accounts, though.
I just checked again, viewing their app, they are using the wording, "Introducing Checking & Savings" under the introduction tab, on the app. The words "checking and savings" are used several times in descriptions. I am not saying they should or should not call it this, just stating the facts as I see them on their app, as of right now, 11:54 PM EST.
You misread what I actually wrote, so I've bolded the important part. They're intentionally obfuscating the nature of these products.
Morgan Dollar 1921 wrote: Thu Dec 13, 2018 11:58 pm The banner to tap to "Learn More" says "Checking & Savings" I agree it is closer to a CMA at Fidelity or Schwab, in the fact it is not FDIC insured. The other thing I do not comprehend is many here balk at the lack of FDIC, then mention their or so-so's MMMF is paying almost as much, 63 basis points difference was the spread in one reply. But wait, that MMMF is not FDIC either right ???
Vanguard's money market funds are regulated as securities and invest mostly in debt guaranteed by the federal government (i.e. the same guarantee that stands behind FDIC insurance). Sweep cash in Fidelity and Schwab retail brokerage accounts is placed in linked FDIC-insured bank accounts.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Morgan Dollar 1921 »

You are right, they do NOT use the word "account" with the description. Sorry, I missed that, I did not intend to disagree, just thought maybe you did not have the app, and I was trying to help you and others by describing what I saw, being a user of the app.

My Fidelity sweep is a MMMF, SPAXX, but I also move the bulk there to SPRXX, (2.11%) ,..but I had to change the settings to that as I recall.

I may have $200-300, in the Vanguard sweep, what ever it may be, the bulk of funds there are applied to my investment asset allocation.

Schwab, for the sweep account is an FDIC account, but I move the bulk to SWVXX (2.16%) inside the brokerage account.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by tfb »

Morgan Dollar 1921 wrote: Thu Dec 13, 2018 11:58 pm The other thing I do not comprehend is many here balk at the lack of FDIC, then mention their or so-so's MMMF is paying almost as much, 63 basis points difference was the spread in one reply. But wait, that MMMF is not FDIC either right ???
A money market fund is registered with the SEC. It has specific assets in it. The yield comes from those actual assets, minus expenses, not by someone just pulling a number out of the air. If the fund company goes away, the assets are still there. So the 2.37% number is much more reliable, and it can go up if the market yields go up, whereas the 3% number can last only a short period, the spread over other MMF can erode over time, and investors don't own specific assets.
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Re: 3% Interest on checking and savings account - Robinhood

Post by adrift »

Morgan Dollar 1921 wrote: Thu Dec 13, 2018 2:01 pm I drilled down, chuckled when I found they were using an old line small Ohio bank, "Sutton Bank, founded in 1878, I thought, well they survived the Great Depression, so that was the first thumbs up. It ties right in with their marketing of trust.
When I saw your post, the first thing I thought of was the notorious bank robber Willie Sutton's possibly apocryphal quote "I rob banks because that's where the money is".

The second thing I thought of was Barings Bank
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by Grt2bOutdoors »

A fool and his money are soon departed.
I would pass on this - venture capital is no different than private equity, they aren’t doing this out of the goodness of their hearts. They are in it for the money. Seeing as this is not insured money, if you want a higher yield (though not quite 3% yet) and some protection - a 1940 act money market mutual fund offers more protection even if it isn’t insured because they are subject to regulation. This product from what I read above falls into the category of “if it seems to good to true, it usually is, Buyer beware. I’d like to see these “depositors” get their money “dollar for dollar” when the VC’s say “game over” and refuse to fund another penny in “interest”.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by Grt2bOutdoors »

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Re: 3% Interest on checking and savings account - Robinhood

Post by baliktad »

Scooter57 wrote: Thu Dec 13, 2018 1:28 pm Also they charge a $75 fee to transfer cash to another brokerage.
https://support.robinhood.com/hc/en-us ... od-Account
The document you link to refers to transfers via ACATS. Presumably no one is going to transfer cash via ACATS unless closing the account, in which case the $75 transfer fee is perhaps better considered an account closing fee.

The fee to transfer cash only varies by method. The options in the commission schedule for transferring cash domestically are:

ACH: Free
Wire Transfer: $25
Overnight Check: $35
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by boglewill34 »

Folks, IF this isn't a loss leader, and IF interest rates go up, when they do go up doesn't this account lose principle, given that it's not FDIC?
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by sparksfly »

https://www.cnbc.com/2018/12/14/sipc-ch ... ounts.html

Appears that SIPC chief is as surprised about this as everybody else :oops:
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Re: Does the 3% savings at robinhood make emergency funds ladders obsolete?

Post by bluerafters »

Appreciate the links.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Scooter57 »

Bloomberg reports that the head of the SIPC stated that this account would not be insured by SIPC and that yesterday was the first time they'd heard of it. Said if they'd had a call from Robinhood they could have made that clear to them.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by WanderingDoc »

bgf wrote: Thu Dec 13, 2018 10:59 am interesting how people are upset about app v desktop. my wife hasnt had a computer in years and mine if often duplicative for everything but word processing.
Try reading a book, studying a language, etc. on mobile. Also, not great for your eyes or posture. Desktop is just better.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by LadyGeek »

Scooter57 wrote: Fri Dec 14, 2018 11:29 am Bloomberg reports that the head of the SIPC stated that this account would not be insured by SIPC and that yesterday was the first time they'd heard of it. Said if they'd had a call from Robinhood they could have made that clear to them.
Thanks! Here's the link: SIPC Says It Has Serious Concerns About Robinhood's New Product
“The statute that we administer says that we protect money with a brokerage firm that is used for the purchase of securities,” he added. “On Robinhood’s help page, it says that you don’t need to invest to use Robinhood checking and savings, that statement is wrong. If you deposit money for any other purpose, it is not protected.”
=============
The product has finally been defined: Robinhood’s 3% Interest Checking Is Just a Money-Market Fund, from Bloomberg. (The comments about SIPC protection have been superseded by the above article.)

I have updated the first post of this thread with this new information.

Update: The first post of this thread has been further updated - no official definition of this fund has been provided. See below.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by JamesSFO »

This seems even more deceptive than it did when the SIPC questions were floating yesterday. Does anyone know if the prospectus for the fund has yet been posted?
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by tfb »

LadyGeek wrote: Fri Dec 14, 2018 11:47 am The product has finally been defined: Robinhood’s 3% Interest Checking Is Just a Money-Market Fund, from Bloomberg. (The comments about SIPC protection have been superseded by the above article.)
It has not. That title is just someone's opinion. There is no actual money market fund.
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SIPC "disagrees with the statement that these funds are protected by SIPC."

Post by nisiprius »

Scooped... but I'm not going to waste these red flags.

Image Image Image Image Image Image Image Image Image Image

Bloomberg:

SIPC Says It Has Serious Concerns About Robinhood's New Product
The Securities Investor Protection Corp. said a new checking account from Robinhood Financial LLC raises red flags and that the deposited funds may not be eligible for protection....

“I disagree with the statement that these funds are protected by SIPC,” Stephen Harbeck, president and chief executive officer of SIPC, said in an interview Friday.

“The statute that we administer says that we protect money with a brokerage firm that is used for the purchase of securities,” he added. “On Robinhood’s help page, it says that you don’t need to invest to use Robinhood checking and savings, that statement is wrong. If you deposit money for any other purpose, it is not protected.”
As I thought, the SIPC only insures cash balances in those mysterious non-interest-bearing "cash balance" brokerage accounts, that I've occasionally seen last for a matter of hours before vanishing into a securities holding or a "settlement account" money market fund.

Notice that money market mutual funds are securities, and like other securities the SIPC does not insure them against loss of value, which actually occurred in 2008 with the Reserve Primary fund. In the wake of 2008, the FDIC insured money market mutual funds for, maybe a year, but that protection was dropped long ago.

Money market mutual funds are sort of like banks were before deposit insurance. Their safety depends on the management's prudence. From the first one invented in 1970 until 2008, the managers were prudent and as far as I know, no such fund failed, but that was just because the managers were all acting in their enlightened self-interest and being careful.

If Robinhood actually is managing a money market mutual fund (and not something else), remember that unlike bank accounts, not all money market mutual funds are equally safe.

Given that Robinhood was willing to jump the gun and claim SIPC coverage before finding out if the SIPC agreed, I think we can assume that Robinhood is aggressive and willing to take risks.

It's possible, that as tfb seems to be hinting, that this is not even a money market mutual fund and subject to the regulations of money market mutual funds, but a unique, Robinhood-invented product that is merely "like" a money market mutual fund.

Try to remember the days in 2006 and 2007 when people got hurt investing in things that, well, they're not like cash, but they're pretty much sorta kinda like cash and really pretty safe: auction rate securities, the GE Enhanced Cash Fund (not a money market fund but with "cash" in the fund name), Schwab YieldPlus.
Last edited by nisiprius on Fri Dec 14, 2018 12:42 pm, edited 8 times in total.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Smorgasbord »

While I probably won't be an early adopter of Robinhood's checking account, it is interesting that we are now discussing [potentially] federally insured saving products with rates that are within striking distance of the mortgages many of us have. The "should I pay off my mortgage?" threads in the next few years should be interesting.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Daitokuji »

It's a money market fund, SIPC doesn't protect against those kind of losses. They haven't even announced a launch date. I bet by the time it actually does launch the rate for VMMXX will be similar and not worth transferring any significant amount of money to this. Nice PR for the company and I guess if you want a no-fee online checking/savings account it's fine but the biggest impact of this will hopefully be to get other companies to raise their rates.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Captain kangaroo »

I think Robinhood is a great product, for what it is.

I would never use it as my all-in-one brokerage/savings/checking ecosystem though. Once you reach that point, customer service really matters.

Fidelity and Merrill Edge/BoA seem to really be the best if you want one big ecosystem to incorporate your finances.

I use Merrill Edge and BoA for investing, checkings, physical banking and probably mortgage if/when the time comes.

edit: Schwab is also a great choice.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by LadyGeek »

tfb wrote: Fri Dec 14, 2018 12:02 pm
LadyGeek wrote: Fri Dec 14, 2018 11:47 am The product has finally been defined: Robinhood’s 3% Interest Checking Is Just a Money-Market Fund, from Bloomberg. (The comments about SIPC protection have been superseded by the above article.)
It has not. That title is just someone's opinion. There is no actual money market fund.
Thanks, I have fixed my post and the first post of this thread.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Nuestroro »

How is this not a violation of Glass-Steagall, specifically 12 USC 378?
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Re: 3% Interest on checking and savings account - Robinhood

Post by ThrustVectoring »

Scooter57 wrote: Thu Dec 13, 2018 1:28 pm
neoptolemus412 wrote: Thu Dec 13, 2018 11:20 am I posted a longer reply in another thread, but in short, this is not a bank account nor does it have FDIC insurance. The product will invest your money in short-term, highly safe securities (US treasuries) to obtain 3%.
Where would they be finding short-term highly safe securities (US treasuries) paying 3%? The only treasuries paying that kind of rate mature in over 10 years.
They expect you to use the debit card they offer with the service, and that debit card usage generates interchange fees, which should make the business profitable. Typically interest-bearing accounts above the money market rate have annoying restrictions like "set up direct deposit" and "make 15 debit card purchases each month" and "you only get interest on the first $10,000".

Also banking accounts are typically very sticky. If all it is is paying $8000 * .06% = $48/yr to get bank-account level customer acquisition instead of what they currently have, it's likely worthwhile just on customer acquisition terms.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by ThrustVectoring »

Nuestroro wrote: Fri Dec 14, 2018 1:43 pm How is this not a violation of Glass-Steagall, specifically 12 USC 378?
They're not offering the interest bearing account directly as their own offering. They are adding functionality to their web and phone applications to integrate with a partner bank who is offering those accounts.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by bgf »

WanderingDoc wrote: Fri Dec 14, 2018 11:38 am
bgf wrote: Thu Dec 13, 2018 10:59 am interesting how people are upset about app v desktop. my wife hasnt had a computer in years and mine if often duplicative for everything but word processing.
Try reading a book, studying a language, etc. on mobile. Also, not great for your eyes or posture. Desktop is just better.
i generally read physical books. i prefer them, but when i dont read those i read either on my 7in tablet or my chromebook which folds into a tablet. both are far better than a desktop monitor.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by vmsx »

Robinhood's "innovation" seems to be naming something what it in fact is not. It's not a guaranteed cash on demand account, thus not a checking and savings account.

In a severe market downturn, access to funds could be restricted, and this fact needs to be prominently disclosed.

The fact that the company is willing to play fast and loose by playing sleight of hand with reality isn't encouraging; this is where evil begins.
Last edited by vmsx on Fri Dec 14, 2018 3:14 pm, edited 1 time in total.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Nuestroro »

ThrustVectoring wrote: Fri Dec 14, 2018 1:55 pm
Nuestroro wrote: Fri Dec 14, 2018 1:43 pm How is this not a violation of Glass-Steagall, specifically 12 USC 378?
They're not offering the interest bearing account directly as their own offering. They are adding functionality to their web and phone applications to integrate with a partner bank who is offering those accounts.
That's possible, but doesn't square with what we know so far. If this money were held by a bank partner, it'd be insured by the FDIC, not SIPC. I hope Robinhood has a good criminal defense lawyer on retainer.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Scooter57 »

To add to the confusion, Robinhood spammed me this morning with a email It included the wording, "Earn 3% on Your Money
You'll earn 3% on all the money in your checking AND savings every year. That's a free $240 every year for the average American family with $8,000 in the bank. "

Then at the end it said, "Supplies are limited. Update to the latest version of the Robinhood app to get early access. "

So they are offering but not really offering a checking and savings account that isn't a checking or savings account supposedly paying interest at a level that is well above market rates which you will only find out you can't get after you have downloaded their app and signed up for a Robinhood investment account.

There are so many problems with this. It may cost them some serious money before they are done.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by patrick013 »

The account cash balance should stay the same. If RobinHood goes bankrupt and cannot payout the SIPC will pay. No ? I don't think the balance should change based on RobinHood's fortunes.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by nisiprius »

patrick013 wrote: Fri Dec 14, 2018 4:07 pm The account cash balance should stay the same. If RobinHood goes bankrupt and cannot payout the SIPC will pay. No ? I don't think the balance should change based on Robinhood's fortunes.
I can't seem to find details on Robinhood, but I don't believe it's a true "cash balance" as in brokerage cash accounts. The true "cash" in brokerages does not earn any interest, it's really cash, and it isn't good for everything except very-short-term holding.

RobinHood pays interest on this "checking and savings" account, so they are investing it in something. If they invest it in super-safe assets, the way money market mutual funds are supposed to, then it's as safe as what they choose to invest it in. If they screw up the way the Reserve Primary Money Market Mutual Fund did and invest in something risky, then the value of the investments could decline, and SIPC does nothing if that happens.

Sutton Bank's participation just seems to involve the debit card. If the savings account were actually at Sutton Bank, it would be FDIC-insured, and Robinhood says it isn't.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by JustinR »

They removed the "Checking & Savings" FAQ in their FAQ section.

Yesterday: https://web.archive.org/web/20181213225 ... m/hc/en-us
Now: https://support.robinhood.com/hc/en-us

Hmmmm maybe they're not so confident about what exactly it is they're offering.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by nisiprius »

JustinR wrote: Fri Dec 14, 2018 9:27 pm They removed the "Checking & Savings" FAQ in their FAQ section.

Yesterday: https://web.archive.org/web/20181213225 ... m/hc/en-us
Now: https://support.robinhood.com/hc/en-us

Hmmmm maybe they're not so confident about what exactly it is they're offering.
Was it actually available, or were they only offering to put people on a waiting list? I suspect that the spate of articles like these...

Image

...has put it the product on hold until Robinhood can resolve the insurance question... and killed it entirely if they can't.
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by Oicuryy »

Here is their "Oops!" announcement.
https://blog.robinhood.com/news/2018/12 ... r-founders

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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by LadyGeek »

Thanks! I have modified the first post and retitled the thread to reflect Robinhood's definition of this offering.
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by LadyGeek »

The "fine print" at the bottom of the page has also been updated.
The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.
Source: Robinhood, scroll to bottom.
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Re: Robinhood to launch 3% Checking & Savings Accounts

Post by WanderingDoc »

bgf wrote: Fri Dec 14, 2018 2:35 pm
WanderingDoc wrote: Fri Dec 14, 2018 11:38 am
bgf wrote: Thu Dec 13, 2018 10:59 am interesting how people are upset about app v desktop. my wife hasnt had a computer in years and mine if often duplicative for everything but word processing.
Try reading a book, studying a language, etc. on mobile. Also, not great for your eyes or posture. Desktop is just better.
i generally read physical books. i prefer them, but when i dont read those i read either on my 7in tablet or my chromebook which folds into a tablet. both are far better than a desktop monitor.
The discussion wasn't about tablets. Mobile vs. desktop
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by Dandy »

Given that Robinhood was willing to jump the gun and claim SIPC coverage before finding out if the SIPC agreed, I think we can assume that Robinhood is aggressive and willing to take risks.
+1

As I said I would approach this account with caution. The early bird gets the worm - the early worm gets eaten. Might be wise to not be early -- you might be a worm. Savings and checking is usually for your "safe" money.
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by CULater »

Robinhood accounts may not have SIPC protection.

https://www.marketwatch.com/story/robin ... 2018-12-14
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by Patzer »

Robinhood has revamped the product.
It is now called a "Cash Management" account on their website, and gives no details of how it will work.
It has deleted all public announcements that referred to it as a Checking/Savings Account.

The posted the following statement:
"We’re excited and humbled by the response to yesterday’s announcement of Robinhood’s cash management program launching in 2019. However, we realize the announcement may have caused some confusion.

As a licensed broker-dealer, we’re highly regulated and take clear communication very seriously. We plan to work closely with regulators as we prepare to launch our cash management program, and we’re revamping our marketing materials, including the name.

Our promise is unwavering—we always put our customers first—whether it’s deciding which features to build, keeping your cash and securities protected, or offering products that allow everyone to participate in and benefit from the financial system.

Stay tuned for updates."
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Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Post by patrick013 »

nisiprius wrote: Fri Dec 14, 2018 7:00 pm If they screw up the way the Reserve Primary Money Market Mutual Fund did and invest in something risky, then the value of the investments could decline, and SIPC does nothing if that happens.

Sutton Bank's participation just seems to involve the debit card. If the savings account were actually at Sutton Bank, it would be FDIC-insured, and Robinhood says it isn't.
Well they are paying out interest potentially so the account balance must be invested by them in something. As principal Robin Hood should have presented this to the SEC and the SIPC beforehand for approval. We shall see what we shall see. The account balance needs to be insured dollar for dollar before most people would jump in. An investment fund that isn't an investment fund is a very, very rare occurrence.
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by aristotelian »

Dandy wrote: Sat Dec 15, 2018 8:58 am
Given that Robinhood was willing to jump the gun and claim SIPC coverage before finding out if the SIPC agreed, I think we can assume that Robinhood is aggressive and willing to take risks.
+1

As I said I would approach this account with caution. The early bird gets the worm - the early worm gets eaten. Might be wise to not be early -- you might be a worm. Savings and checking is usually for your "safe" money.
One gets the impression they are a tech company pretending to be a finance company, with no finance experience or expertise.
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by TravelGeek »

Patzer wrote: Sat Dec 15, 2018 11:39 am Robinhood has revamped the product.
It is now called a "Cash Management" account on their website, and gives no details of how it will work.

https://www.bloomberg.com/news/articles ... g-scrutiny

I am not a RH customer, and this episode doesn’t inspire me to become one.
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Re: [Robinhood to offer 3% cash management program, not a bank account]

Post by GoldenFinch »

This is really bad publicity. It appears that they don’t know what they’re doing and kind of “winging it.”
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