Robinhood has finally launched its bank account. The online brokerage firm rolled out Cash Management to some early users who were first in line. This product will move the money customers don’t currently have in stocks into a separate account that pays 1.8% interest.
The lomg awaited launch comes after a debacle for the company last year, when Robinhood announced a product called Checking & Savings that promised great interest rates. But they weren’t actually licensed to do so yet. So it took another year for them to get everything in order and launch their reworked and renamed Cash Management account.
Cash Management will offer bank-like services, including debit cards and Federal Deposit Insurance Corp. coverage on deposits. The latter will be provided through a partnership with existing banks.
The debut of Cash Management comes after several other financial technology startups have rolled out their own banking services.
Robinhood’s main business of free stock trading is also seeing more competition as major companies such as Charles Schwab, E*Trade Financial Corp. and TD Ameritrade Holding Corp. all eliminated trading fees for U.S. stocks, exchange traded funds and options. Robinhood also started offering fractional shares today as they see competition from smaller fintechs as well. This is the option to buy parts of a stock, for as little as $1, instead of having to by full stocks only. If you want, you’ll be able to buy just $1 worth of Apple stock for example, rather than saving up the $270 for one full share.