Robinhood is Trying Banking Once Again
Robinhood is trying banking once again. On Tuesday, the investment app announced a cash management feature for its brokerage accounts that will carry an annual percentage yield of 2.05%. The cash management feature will also come with a Mastercard debit card. The app was made famous by offering free trading. You can sign up for an account here.
The new rollout comes almost a year after Robinhood first announced it would offer cash management accounts called Robinhood Checking & Savings, offering 3% interest. Just days later it was revealed that these accounts were not FDIC insured. Plans were scrapped, and it took a while for Robinhood to bring these accounts back to life. With interest rates falling, the 3% is no longer part of the offer.
Cash deposited into Robinhood’s accounts are automatically sent into accounts at partner banks. The company said it could change those partner banks at any time. Customers will be insured for up to $250,000 at each of these partner banks, for a maximum of $1.25 million, by the Federal Deposit Insurance Corp. There are currently six banks participating in the program: Goldman Sachs, Wells Fargo, Citibank, Bank of Baroda and U.S. Bank.
However, customers will need to monitor their individual accounts at each of the partner banks to ensure that the funds deposited don’t exceed $250,000. And if customers already have accounts at one of these banks, they can request that Robinhood sweep their cash management deposits to another institution if they’re in danger of surpassing the $250,000 limit at a given bank.
The product will not be immediately available on Tuesday, but Robinhood will open a waitlist for interested customers.