Robinhood Cash Account Now Publicly Available

Update 11/12/20: Robinhood Cash Account is now publicly available. Interest rate is down to .3%.

[Update 12/11/19: This account is now rolling out to the first customers that were on the waitlist. Update 10/30/19: Rate has already been decreased to 1.8%. Hat tip to @HH_Cash]

Robinhood has relaunched their cash account, this time with a current APY rate of 2.05%. They’ve also added FDIC insurance to the account as part of the relaunch.

The account offers FDIC insurance on up to $1.25M, as part of the companies partnership with 6 different banks. The debit card associated with the account runs in partnership with Sutton Bank. You can opt-in to have uninvested cash from your brokerage account swept automatically to the savings account. Like all variable rates, the 2.05% can go up or down over time.

They initially unveiled their hybrid checking/savings account to much fanfare with a 3% APY and no FDIC insurance, then it became dubious whether their SPIC insurance would cover such an account, then they pulled the idea with plans of revamping. We’re now seeing what the revamp looks like, including the lower rate and the addition of FDIC insurance.

To be fair, rates have dropped roughly .5% since their initial launch across the entire savings account industry, yet their rate dropped even more than their initial 3% shocker rate. During their initial launch, they were a solid .5% ahead of anyone else in savings rates (top rate then was ~2.5%); now they aren’t even near the top. Apparently, the additional cost of joining up with FDIC banks forced them to push the rate lower.

It still could make sense for someone who uses Robinhood for trading – I wish my brokerage had a high yield savings account; and then it could make sense for anyone due the decent rate. They aren’t at the top of the list of rates, but it’s hard to know for certain which of those banks at the top will keep the high rates long term. When comparing them against the likes of Ally and Discover who maintain good rates over the long haul, Robinhood compares favorably at .15% above with Ally and Discover currently offering 1.90%. Assuming Robinhood maintains the high rate for the long haul, which is what I’d expect, it could be a nice option.

This account could amount to saving the company in a certain sense as many brokerages have recently stopped charging for trades, something that was always Robinhood’s biggest attraction. Now, being able to have funds auto-sweep into a high-yield savings account might become the biggest attraction.