It has been two years since the stock trading app Robinhood announced it was launching a cash management account. That offering was swiftly withdrawn, and the entire incident was an inconvenience for the organization. Nonetheless, the basis of this concept was eventually resurrected and is now known as the Robinhood Cash Management Account.
As I am writing this, Robinhood has just had its biggest challenge yet. They have been making a lot of changes that have been very controversial.
But we will not talk about that today and just focus on the new Cash Management account they have. We will look at what it offers and how it is better than some other options you might find.
Robinhood has a cash management account. I will tell you what you need to know about it.
The Features of Robinhood Cash Management according to my experience are as follows
Robinhood Cash Management is a good account for people who want to save money. It is not actually a bank, but it can act like one.
You can deposit money and it will be taken to different banks. And if you put your money in the FDIC insurance, your money will not go away if something happens to the bank.
If you have a lot of money, then it’s useful to put it in the bank. Some banks offer more interest rates than other banks. The current rate is 0.30%. It may not be as high as 3%, but it is still higher than some other options.
You can use Robinhood’s debit card to get money at more than 75,000 ATMs without paying a fee. These ATMs must be connected to the Allpoint or MoneyPass network.
That means Robinhood has one of the most diverse options of machines among digital banking providers. You can find such ATMs in your area and avoid fees by using this tool in the app. Sure enough, when I looked, there were plenty of free ATMs in my area – and when I used one, it didn’t charge me anything.
Robinhood Cash Management does not charge any fees. There are no maintenance costs, inactivity fees, or replacement card fees. You can use your card anywhere in the world and there will be no foreign transaction fee.
Signing Up for Robinhood Cash Management
To get a Robinhood debit card, you need to wait on the list. But now it is available for all customers. You need to have a Robinhood account to open this card.
If you are opt-in, you will have a choice of four different debit cards. You can get a green card, a white card, a black card or an American flag.
Alternatively, if you do not want to get the physical debit card but just have one that is electronic instead then that is also possible.
Getting Your Account Set Up
When I ordered my card, I could start to use it with Apple Pay. It also lets me see my account number. The account number allowed me to add my new card to Apple Pay even though the physical card had not yet arrived. I could also transfer money over by selecting a bank account that was already linked or adding a new one.
The debit card’s arrival
When I got my card, I found it was a parcel. Inside was something that needed more care, like a puffy envelope. I opened the envelope and found out why it needed extra care.
Instead of having a card attached to the paper, the Robinhood debit card is in a box. When you pull on one side, the other side will open and out pop your card. If you want to know more about the Robinhood account, I’ll refer you to my guide.
The packaging was so fun to play with. But I stopped myself from doing it. Then I went to the Robinhood app to activate my card. It only took a few touches.
Making a Deposit
When you first set up your Robinhood Cash Management account, you may have money available. This is because if you have Buying Power on Robinhood, this will roll over to the Cash Management account. You will start earning interest on your money right away.
You can add to your balance by doing a transfer. This is when you take money from one bank account and put it in another. The first thing you do is open up the other bank account.
You will have to wait for this account to open before you can make the transfer, but Robinhood lets you know when that will happen.
If you are already a Robinhood user, you may know that usually when you make a deposit, it will be available immediately. This also applies to deposits made through the Cash Management tab on the website.
This means that your money will not yet be available for withdrawing via ATM or debit purchase, but it will still show up in your Buying Power for stock trades. This is not really a change, but it’s nice to have this option while waiting for your money to fully clear.
If you want to put a lot of money into your Cash Management account, there are ways for that. You can set up a direct deposit so that your checks go straight to your account on payday.
If you want to do this, go to the company’s payroll portal and enter the routing and account information or ask Robinhood for a form.
You can transfer money with this program. This will happen on a weekly, bi-weekly, monthly or quarterly basis. It really seems that they could have more options for the person who is setting up the transfers to pick what day or date of the month they want it to happen.
Money management offers you 0.30% APY. You can see how much interest you are getting in a month by checking the Cash Management tab. This is cool because you know what to expect when the money is paid.
Managing your card and location protection
Via the Cash Management tab of the Robinhood app, you can work with your card. You can see your card number and lock it if need be. You also have to enter a PIN for certain purchases.
One way that Robinhood is safe is with location protection. This means that they will stop debit card transactions if your phone thinks you are in a different place than where the transaction was made.
For example, if you’re in Arizona and your card is used in Wyoming, then they will stop it. To turn this on, make sure to allow them to use your location information.
Location Protection can be turned off if you want. You do not need to turn it on. It is also not in the Cash Management tab like other options like Lock Card are. Instead, go to your general Robinhood settings and then go to the Cash Management section.
Interest Rate On Savings
If you want to earn money in a bank account, Robinhood has the best rate. It is 0.30% APY compared to 0.25% for SoFi Money. People who have SoFi Money will need to deposit at least $500 every month.
If they want this rate or else they will not get it until June 8th, 2020 when it becomes automatic for everyone who has an account before that date. But Robinhood does not require any kind of deposit so it wins this round.
Robinhood and SoFi both offer free ATMs. But, Robinhood’s card can be used at the Allpoint and Moneypass networks while SoFi’s card can be used on machines in the Allpoint network. Plus, Robinhood does not charge fees for ATM withdrawals so it is better than SoFi in this category.
Robinhood is good for people who want a checking account. It has a money transfer service and it is easier to find your money because you can see it all in one place.
But if you also need a savings account, then Robinhood might not be the best choice for you. SoFi has more options so it would be better if you want both things from an online bank.
When I first did the comparison, I found that SoFi Money was best. But that is because I am a long-time customer and get special perks. Now, when I looked again, Robinhood Cash Management was good too. It has a higher APY and an ATM network with more machines.
SoFi Money has features that you might want. For example, mobile check deposits or cashback offers.
How Does Robinhood Cash Management work?
Robinhood is a company that also provides financial services. They offer high-interest savings accounts. And they have debit cards like checking accounts.
To open a Robinhood Cash Management Account, go to Robinhood.com and make a brokerage account before you can open the Cash Management Account. Before the cash management account existed, people would keep their money in their brokerage account until they wanted to invest it in stocks or bonds.
The company takes your uninvested cash and puts it in Robinhood Cash Management. Banks will pay interest on the cash.
Robinhood has partnerships with banks. Most banks have a limit of up to $250,000 that they will ensure your money for. Robinhood has more than one bank as a partner, so you can have up to $1.25 million in FDIC insurance if you do not go over the maximum amount allowed by law.
You can use up to 75,000 ATMs for free. If you use an ATM that is not from the same bank, then it might cost money.
Is Robinhood Trustworthy?
The Better Business Bureau gave Robinhood a low score. The BBB said they had many unresolved complaints.
Robinhood has had some problems with its investment platform. You need to have a Robinhood brokerage account to get the cash management account. We think this is important, but it might not be something you care about if you are not planning on using the investment platform.
In January 2021, Robinhood halted trading for two companies. AMC Entertainment and GameStop. They faced lawsuits because of this decision. In 2020, a young user lost money from investments on the app and committed suicide.
People were upset with this for a while but Robinhood has since put more educational material on the site to help people avoid losing money as he did. If you are worried about the scandals that Robinhood has, then you might want to bank at another company.
Robinhood Review VS Wealthfront Review
Wealthfront works like a bank. You have a savings account and an everyday spending account. All the money is in one place and you can earn interest on all of it.
Robinhood is a good option if you travel abroad. They don’t charge fees for transactions outside of the United States, but Wealthfront charges an additional 2.75% if you use your card outside of the US and $2.50 for withdrawing from a foreign ATM.
Some people might not want to wait for their paycheck. But you can get your paycheck sooner with Wealthfront. You can also deposit checks and cash, but only direct deposits are allowed with Robinhood.
Robinhood Review VS Betterment Review
Betterment might be a good choice if you want to keep checking and savings separate. The Betterment Checking Account and the Cash Reserve Account work like a checking account and a savings account.
You can make money from your Cash Reserve account to put in your checking account, but Betterment only pays interest on the Cash Reserve Account. Robinhood pays interest for all of your balance, not just what is in the cash reserve.
If you want to get cashback on your debit card purchases, you may like the Betterment Checking Account.
Who is Robinhood Cash Management For?
Robinhood Cash Management has good features for certain people. For example, if you want a paperless experience with a high APY and don’t travel internationally, this account might be good for you. If so, sign up here.
Robinhood Cash Management is not as good as it used to be, because now there are fewer branches. It is also hard to deposit cash or physical checks. And wire transfers can take a long time.
Robinhood is a brokerage company that does not have any physical branches. They only do transactions through the Robinhood app. Sometimes you might need to do something in person, like take out cash from an ATM at a partner bank.
Robinhood is different from most banks. Customers must do everything digitally. There is no way to deposit cash or deposit a physical paycheck. Some people will like this because it is easy for them, but others might not like it because they want to be able to deposit cash or use their paycheck in person.
If you use the Cash Management card, you can withdraw money at over 75,000 ATMs around the world. You will not be charged any ATM fees when you do this.
When you take out cash, you might have to pay a fee. Robinhood will not charge you for this fee. But if the bank charges too much, it is your responsibility to pay for it.
There are no fees for using your Robinhood debit card when you make purchases abroad. There is also no account minimum, monthly fee, or maintenance fee. This is true regardless of the amount of money in your account.
The Robinhood account does not charge you any fees and lets you use your debit card at home and abroad. Withdrawing cash is also easy with ATMs in the U.S. and other countries too!
If you try to take more money out of your cash management account than you have, Robinhood will reject it. That means that part of the money is missing because you tried to buy something with it.
Banks usually charge you a fee when you overdraw your account. Robinhood will not let customers do this. Some people might like the protection of never being charged an overdraft fee. But some people might want to be able to overdraw their account when they need to.
People Also Ask
What is Robinhood Cash Management?
Robinhood Cash Management is an account that has a debit card, pays interest on the money you have there, and more. It’s like a checking account.
Is Robinhood Cash Management FDIC insured?
Robinhood has worked with many banks. When money is deposited into Robinhood’s Cash Management, it goes into these banks that are FDIC insured up to $1.25 million per account.
How to get Robinhood Cash Management?
If you are already a Robinhood user, go to the Cash tab in the app and confirm the required information. If you are not, make sure that you open a brokerage account before opening your Cash Management account.
Is Robinhood Cash Management safe?
Robinhood has debit cards with a Mastercard and you do not need to worry about your money. You can get up to $1.25 million in FDIC insurance when you put money into the account.
Is a Robinhood cash account good?
Robinhood Cash Management charges a decent interest rate of 0.30%. You can use the money to save or you can also invest it. There are two ways to get this account: by bank transfer, or by direct deposit.
How long does Robinhood cash management take?
Cash Management is about having more ways to add money to your account. You can link a bank account, and those funds will be pending until they clear in up to five days.