INSUBCONTINENT EXCLUSIVE:
This time it actually has insurance
Zero-fee stock-trading app Robinhood is launching Cash Management, a new feature that earns users 2.05% APY interest on uninvested money in
their account with the ability to spend it through a special Mastercard debit card
The waitlist opens today in the United States with the first users to be admitted soon
December with Robinhood Checking, promising a stunningly tall 3% interest rate
declared Robinhood ineligible, with its CEO noting it had never agreed to cover checking accounts
Robinhood earns money by taking a chunk of the interchange fees from transactions on its debit card run in partnership with Sutton Bank, and
from a fee paid by the six banks cash gets swept into.To help it avoid further regulatory missteps, Robinhood yesterday added former SEC
commissioner Dan Gallagher as its first independent board member
supervision to Robinhood.Robinhood co-founders and co-CEOs (from left): Baiju Bhatt and Vlad TenevThe opt-in feature prevents users from
missing out on earning interest if they keep money in their Robinhood account, and makes funds from stock sales quickly accessible via the
debit card for spending or withdrawal
That convenience could give Robinhood an edge as its loses one if its key differentiators
Last week, its top incumbent competitors Charles Schwab, E*Trade and AmeriTrade all dropped their $4.95 to $6.95 fees on stock trades to
That makes Cash Management and Robinhood Crypto even more critical to its continued growth
Any balance on their account, including returns from sales of securities or cryptocurrencies, is swept into the FDIC-insured partner banks
Those banks include Wells Fargo, HSBC, Goldman Sachs, Citibank, United States Bank and Bank of Baroda
If one of those banks folds, the FDIC will make customers whole for up to $250,000, equaling $1.25 million across all six working with
Users are able to opt out of specific banks.There the cash earns a variable annual percentage yield (APY) that may fluctuate based on market
Currently Robinhood offers a 2.05% APY, but refused to compare it to competitors
However, it ranks relatively high amongst popular banking options like these, according to Bankrate, especially given it has no minimum
compete directly with Wealthfront Cash that launched in February and now offers 2.07% APY interest, but lacks a debit card or ATMs
Betterment Checking - Savings does provide a Visa debit card, but its current APY is 1.79%.Cash Management users can select from the four
debit card styles that are accepted anywhere that takes Mastercard, plus 75,000 ATMs
It also works with Apple Pay, Google Pay and Samsung Pay
There are no foreign transaction fees, maintenance fees or account minimum.A variety of new Cash Management features are being added to the
You can get notifications and emails for all your transactions, and lock the card from your phone if you suspect fraud
You also can opt for location protection, which alerts you if your card is used too far away from your phone
Instead of nickel and diming Cash Management users, the startup monetizes by charging its partners
But the bigger strategy is to get more users on Robinhood in hopes some will subscribe to Robinhood Gold
There users pay a variable monthly fee depending on how much they want to borrow from the startup to trade on margin.Robinhood co-CEO Baiju
scrappy startup, the budding fintech giant must now grapple with much greater regulatory scrutiny
