Fintech company Robinhood, known for offering commission-free investing via its trading platform, is taking aim at big banks with its latest offering of checking accounts and savings accounts that earn a three percent interest rate.
The move to offer a savings rate that is 75 basis points higher than the most competitive rates and well beyond those offered by big banks, such as Wells Fargo and Bank of America, comes at an opportune time when the stock market is fueling a risk-off sentiment. U.S. equities investors have been racked by bouts of volatility the last couple of months, causing them to seek safe havens, which could lead to more savings account deposits that yield a competitive rate.
Moreover, Robinhood is offering accounts with no fees, no minimum account balances, no foreign transaction fees, and no overdraft fees.
“We believe you should earn more on your money, and shouldn’t be charged fees to access it,” wrote co-founders Baiju Bhatt and Vlad Tenev.
One notable is that these checking and savings account products are separate balances held within a Robinhood brokerage account. Rather than being FDIC-insured, the accounts are protected by insurance from the Securities Investor Protection Corporation–up to $250,000 in cash.