Robinhood Relaunches Cash Account – Rate Decreased To 1.8% – Rolling Out To First Customers

Update 12/11/19: This account is now rolling out to the first customers that were on the wait list.

Update 10/30/19: Rate has already been decreased to 1.8%. Hat tip to @HH_Cash

Robinhood has relaunched their cash account, this time with a current APY rate of 2.05%. They’ve also added FDIC insurance to the account as part of the relaunch.

You can join the waitlist here.

The account offers FDIC insurance on up to $1.25M, as part of the companies partnership with 6 different banks. The debit card associated with the account runs in partnership with Sutton Bank. You can opt-in to have uninvested cash from your brokerage account swept automatically to the savings account. Like all variable rates, the 2.05% can go up or down over time.

They initially unveiled their hybrid checking/savings account to much fanfare with a 3% APY and no FDIC insurance, then it became dubious whether their SPIC insurance would cover such an account, then they pulled the idea with plans of revamping. We’re now seeing what the revamp looks like, including the lower rate and the addition of FDIC insurance.

To be fair, rates have dropped roughly .5% since their initial launch across the entire savings account industry, yet their rate dropped even more than their initial 3% shocker rate. During their initial launch, they were a solid .5% ahead of anyone else in savings rates (top rate then was ~2.5%); now they aren’t even near the top. Apparently, the additional cost of joining up with FDIC banks forced them to push the rate lower.

It still could make sense for someone who uses Robinhood for trading – I wish my brokerage had a high yield savings account; and then it could make sense for anyone due the decent rate. They aren’t at the top of the list of rates, but it’s hard for certain which of those banks at the top will keep the high rates long term. When comparing them against the likes of Ally and Discover who maintain good rates over the long haul, Robinhood compares favorably at .15% above with Ally and Discover currently offering 1.90%. Assuming Robinhood maintains the high rate for the long haul, which is what I’d expect, it could be a nice option.

This account could amount to saving the company in a certain sense as many brokerages have recently stopped charging for trades, something that was always Robinhood’s biggest attraction. Now, being able to have funds auto-sweep into a high-yield savings account might become the biggest attraction.

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Ali
Ali

You should add that there is no support for check deposit (mobile or otherwise) and no Zelle. So it can’t be a full replacement for a checking account despite having a routing/account number and debit card with ATM access.

jz
jz

I assume that you can ACH in and out of the account, correct?

terrorist96
terrorist96

Yes

IXO
IXO

While it’s good they now have this for univested funds, I wouldn’t move savings money here because I get a higher interest rate directly at an FDIC insured bank (Vio Bank, etc). I typically don’t trust these ‘sweep’ FDIC insurance programs (like Robinhood and CreditKarma) as much as just dealing directly with an FDIC insured bank. If Robinhood folds for example, consider the potential difficulty in filing an FDIC claim with your funds being swept across multiple banks…

Jacob
Jacob

Currently #5,176 out of 817K+ people on the waitlist. Will report back once I receive access.

Mdam0re

I got an in app message saying they are rolling out Partial Shares now too

slowbrake
slowbrake

Now I just need to figure out how to use their infinite leverage to fund the account…..

dafuq
dafuq

waitlist is now 800k+

AL_PF
AL_PF

I was ~1,000 on the waitlist, and got the notification and email around twelve hours ago. Supposedly, the debit card will be arriving soon. Interest begins accruing 12-12-19. Everything seems very sleek, although I can only see myself using this for ACH transfers into the account to save/invest, like I have been, so I can’t really comment on how direct deposit, the debit card (when it arrives), and all of that will be.

john m
john m

Comenity bank is 2%.

Anonn
Anonn
Ali
Ali

That’s a savings account, with the limitations of a savings account (maximum of six withdrawals per cycle). There are other savings accounts with even higher rates than 1.75%. This Robinhood account is more analogous to a checking account.

Lrdxgm
Lrdxgm

Is there regular ACH access to this account, can I link it to credit cards as a payment account?
That 1.8% is still 4 times higher than Alliant currently pays…

AllwaysLearning22
AllwaysLearning22

???
Are you talking about ‘Alliant Credit Union’ ?

Alliant “supplemental” savings is currently 1.70%. It was at 2% a little while back. I don’t have checking with Alliant, I use this savings pretty much as a ‘hub’ account, because I mostly ‘pull’ money into it and ‘push’ only on occasion in larger amounts

Lrdx
Lrdx

Alliant checking pays 0.45%. I’m not talking about savings.

AllwaysLearning22
AllwaysLearning22

In general every checking account has ACH …

AL_PF
AL_PF

You should be able to. They provide a routing number and whatnot.