Robinhood offering 3% on savings, absolutely amazing!

Just read the fine print, and this is just 25% of it I suspect. And this is standard disclaimer on their main webpage. I guess you'd have to sign up with them to get the real dealio.

Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Commission and Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

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.
 
I guess I was wrong...it's not FDIC insured!

Robinhood Checking & Savings will not be insured by the Federal Deposit Insurance Corp. Instead, because the product will be offered by the broker-dealer arm of the company, it will be insured by the Securities Investor Protection Corp., which covers brokerage accounts.


SIPC insurance does not guarantee depositors get all their money back in every circumstance -- something the FDIC can promise because it’s backed by the U.S. government. It will cover $250,000 in losses if Robinhood the company fails financially. Asked about how an economic downturn could impact its checking and savings products, Robinhood wrote in an email: “Customers would get an email notification that clearly states the 3 percent interest rate is changing.”
 
I guess this is a sign of the times. VCs are so happy to fund any startup/unicorn with high growth that they create an incentive for startups to pursue growth at any cost.
 
There are too many mixed messages on this thread. What is the bottom line? If this place goes belly-up will I get my $250k deposit back with their SIPC, as I would with FDIC, or not?
 
S2007S said:
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
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Grandpa never advised you, "if it sounds too good to be true, it probably isn't"?

I don't know the details with Robinhood, but I read a story recently about the amount of money they make and how they do it in spite of "zero commish". I recall being surprised about how MUCH they make. I think it has something to do with "selling your data" ??

In any event... in the "interest rate environment" we're currently in, 3% seems excessive.

Whatever their cash generator.... it's SOOOO lucrative that they're willing to share part of it with customers in order to attract greater deposits.

Is that a "too good to be true" enticement??

SIPC insurance is about being reimbursed under specific conditions for funds "missing" from your brokerage account. Likely won't mean much if/when the SHTF. (Last number I saw on SIPC showed they had only about $8B... to "cover missing funds".) FDIC insurance is much different.

Caveat Emptor.
 
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Scataphagos said:
I don't know the details with Robinhood, but I read a story recently about the amount of money they make and how they do it in spite of "zero commish". I recall being surprised about how MUCH they make. I think it has something to do with "selling your data" ??
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AFAIK they sell order flow for something like 10x the usual rates - don't ask me how they negotiated that or whether it's sustainable.
 
Scataphagos said:
Grandpa never advised you, "if it sounds too good to be true, it probably isn't"?
More...

Pardon for quoting myself... but recalled a favorite anecdote.

Years ago in my financial advisory days, I had a "professional" client couple... Hispanic, both masters degree and making good money in their jobs.

The asked me about investing in "Mexican CDs @ 24% interest for 1 year". I explained... "if someone is willing to pay that much, there must be a catch... a high risk". The catch was risk of currency devaluation, as I explained.

Well, they took the plunge. Middle 6-figure investment @ "guaranteed 24%".

At the end of the year...

1. They'd earned their expected 24%, and had to pay ordinary income tax on the interest.

2. They'd lost more than 24% in the currency devaluation, but had to account for it as a "capital loss".

IOW... they "took it in the shorts" 2-ways. Adjusting for taxes and currency devaluation... and in spite of having "earned 24%", they lost money on the deal.

A deal that was "too good to be true".

Not saying the "Robinhood 3% interest" is the same. Just saying whatever you do, go into it with eyes open.
 
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Scataphagos said:
Grandpa never advised you, "if it sounds too good to be true, it probably isn't"?

I don't know the details with Robinhood, but I read a story recently about the amount of money they make and how they do it in spite of "zero commish". I recall being surprised about how MUCH they make. I think it has something to do with "selling your data" ??

In any event... in the "interest rate environment" we're currently in, 3% seems excessive.

Whatever their cash generator.... it's SOOOO lucrative that they're willing to share part of it with customers in order to attract greater deposits.

Is that a "too good to be true" enticement??

SIPC insurance is about being reimbursed under specific conditions for funds "missing" from your brokerage account. Likely won't mean much if/when the SHTF. (Last number I saw on SIPC showed they had only about $8B... to "cover missing funds".) FDIC insurance is much different.

Caveat Emptor.
More...

Robinhood sells there Order Flow for a lot of money, cause there trader pool is mostly fishes or rich young adults, they get paid premium dollar for there Order Flow... The 3 % stunt is mostly for exposure and bringing in new trading fishes, they make there money selling out there clients. Read the reports on them, scary stuff... I would even place a bet that Wall Street Bets on reddit is a sub-reddit controlled by Robinhood, promoting degenerate gambling trades and making it seem " cool " to brag about bad trades and losing, posting results on robinhood phone app
 
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