By Preston Monroe, aka Biocow, 25-year financial industry veteran.
On Thursday’s show DTNS talked about Robinhood Bank offering checking and savings accounts both paying 3% interest and promising no fees. They also boasted 74,000 ATMs available at no fee in the US. Having worked in the financial industry for 25 years I wanted to look into this.
To me, this didn’t seem “too good to be true”. With no physical branches and limited employees there is very little overhead. They will make their money by lending out funds and on each debit card transaction, AKA “Interchange Income.”
To try to keep this short, here are some highlights I pulled from their website.
Pluses:
They absolutely do not charge fees such as monthly services charges, overdraft fees, transfer fees etc… even replacing a lost ATM/Debit card.
No minimum balances or direct deposit requirements. They do require you to sign up for their brokerage services, but you are not required to actually use them.
3% interest on savings and checking.
Early access to your direct deposits. Robinhood Bank will release your funds as soon as they receive it from your employer, sometimes 2 days early. (Example: If you get paid on Fridays, your employer sends your paycheck 3 to 5 days ahead of time usually arriving at your financial institution Wednesday or Thursday. They are instructed to release it Friday at the latest. Many FIs sit on this and can actually earn interest on your money. Robinhood will release it as soon as they receive it.)
74,000 ATMs on the Allpoint and MoneyPass networks with no fees. If you use a “non-network” ATM (BofA, Chace, etc…) you will most likely be charged a fee by that institution.
Things to watch out for:
This account will work best if you can set up direct deposit of your paycheck.
Other deposited funds may take up to 5 days to be available.
Only about 4,000 of the 74,000 ATMs in the US will accept deposits.
ATM deposits are limited to $1,000 per day, $5,000 per month.
Mobile Deposit are limited to $2,500 per day, $10,000 per month.
ATM withdrawal limit of $510 per day.
Debit purchase limit of $10,000 per day. (This is great if you want to purchase a new 4k TV, but bad if a criminal wants to buy 4 of them.) I hope they have some sort of debit card controls in the app.
With no locations and limited staff, getting help from a person may be an issue.
None of these are necessarily show stoppers though.
Biocow’s Recommendation
There is no reason NOT to get an account. (I’m going to.) Put a little money in it and use it for your lunch money. If it works for you, congrats! You’ve got a new bank!
Definitely link another bank account so you can transfer to and from this one. It’s an easy and often quick way to move money back and forth. And at around $50,000 it has much higher limits than the previously mentioned limits.