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Robinhood Rolls Out Cash Management, But It's Not For Everyone Yet

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Robinhood Rolls Out Cash Management, But It's Not For Everyone Yet

Robinhood Markets Inc launched its “Cash Management” service to a select base of customers on Wednesday.

What Happened

The Cash Management service will allow the users to move their uninvested cash in their brokerage account to an interest-earning account which they can access through Robinhood debit cards.

The financial services company is offering an annual percentage yield of 1.8% for these accounts.

The company was promising an interest rate of 2.05% in October, as reported by Bloomberg. Last year, it promised a 3% interest rate for what was then called the Checking & Savings service.

Robinhood said that it would transfer the user’s uninvested money to an account in a partner bank, where their money falls under the Federal Deposit Insurance Corporation rules.

Why It Matters

The Cash Management service is a significantly toned-down version of the Checking & Savings program Robinhood introduced December last year.

The financial services company had said at the time that the ambitious service offered through its brokerage arm would be covered by the Securities Investor Protection Corporation’s insurance.

The SIPC soon busts the bubble, saying that Robinhood’s service won’t be covered through its program — forcing the company to rework the details.

Photo: Courtesy of Robinhood.com

Posted-In: Bloomberg cash management RobinhoodFintech News Tech Media Best of Benzinga

 

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