Robinhood is about to start offering free savings/checking accounts with a 3% interest rate. Trying to wrap my mind around how they can make that work.https://share.robinhood.com/cs-CKQH59zREuDDZQM8cfic9k …
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I need to read up on the differences between SIPC and FDIC
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It appears SIPC does not insure the cash in your account.
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I had to google what interchange fee means https://en.m.wikipedia.org/wiki/Interchange_fee … Thanks for the education both
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I can’t see interchange fees from swipes being high even if ones spending is high relative to wealth. Users will be utilizing their credit cards not this debit card to earn points and pay their CC off with the checking account.
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That and also making sure there isn't significant cash outflow to any survive major market downturns. Even if this product itself is red on the balance sheet, it contributes to the bottom line by providing the cross-selling capabilities
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The cost of operating checking/savings accounts isn't solely interest paid out. Everything else (bill pay, checks, transfers, etc…) costs *something*. Even assuming healthy interchange, this must be skating pretty close to zero or red.
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Having modeled a bunch of interchange revenue cases, my rule of thumb is: if you're NOT serving commercial cards, you're running close to zero or red (specially in European Union countries). So, take this as acquisition cost and your long game needs to bring you OTHER revenues
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