Robinhood’s 3% Interest Checking Is Just a Money-Market Fund
The fintech startup’s plan to disrupt bank accounts is a familiar product in disguise.
A classic dressed up for young people.
Photographer: Fox Photos/Hulton Archive/Getty Images
Robinhood Financial LLC’s grand plan to disrupt the traditional bank account with a checking-and-savings offering isn’t quite as innovative as it might seem. It’s effectively a classic money-market fund with a few additional bells and whistles.
The startup, which got off the ground as a no-fee stock trading app, began to roll out its “Robinhood Checking & Savings” on Thursday. Its website trumpets the plans as “fee-free and give 3 percent on every dollar.” That sounds great, considering that other high-earning online savings accounts from Barclays Plc and Marcus, the consumer arm of Goldman Sachs Group Inc., have interest rates of about 2 percent. As Bloomberg News’s Julie Verhage reported, though, “There are some key differences in how the product was created — including how it’s insured.” First and foremost, the fine print on its website states that the new offering “is not a separate account or a bank account.”