Robinhood's Cash Management Is Finally LiveRobinhood's Cash Management Is Finally Live
Almost exactly one year after its ill-fated 'Checking & Savings' was announced, Robinhood's cash solution is up and running.
Nearly a full year after launching a “Checking & Savings” service that raised regulators’ eyebrows and was quickly rebranded after it "caused some confusion” among investors, Robinhood is finally rolling out its Cash Management feature, according to a blog post. The mobile-friendly financial services firm is launching its cash solution to the first investors on its waitlist, with a 1.80% annual percentage yield paid on uninvested cash held in investors’ brokerage accounts.
After attempting to insure assets in its cash solution with Securities Investor Protection Corporation insurance, Robinhood changed tack and joined the ranks of other fintech firms by working alongside “program banks” to provide FDIC insurance. The Robinhood solution provides a total of $1.25 million in FDIC insurance, and APY rates are determined by those same “program banks.”
As of October 8, Robinhood’s bank network included Goldman Sachs Bank, HSBC Bank, Wells Fargo Bank, Citibank, Bank of Baroda and U.S. Bank. “Each Program Bank will pay Robinhood a fee equal to a percentage of the daily deposit balance in your Deposit Accounts at the Program Bank, up to 1% on an annual basis,” according to information provided by Robinhood. “Robinhood may change the fee or range of fees, and may vary the amount of the change among clients.”
Citibank and Wells Fargo Bank are no strangers to fintech clients’ assets. Both participate in Betterment and Wealthfront’s cash solutions, according to information provided by both automated advice platforms, or so-called robo advisors. HSBC Bank is currently listed as a participant in Wealthfront’s cash solution, as well.
