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US-based Robinhood launches savings product

RobinhoodUS-based stock trading firm Robinhood has launched Robinhood Cash Management, a savings product that will offer 2.05 percent interest combined with an associated debit card, it said in an official blog post on Tuesday.

“We believe our financial system should work for you and do more for your money. To help get us there, we announced plans in December to launch a new product. We made mistakes with that announcement, which led us to hit the reset button and start over from scratch,” Robinhood said.

The Cash Management account offers almost the same benefits and branding as the aborted Checking & Savings product, but this product offers FDIC insurance on uninvested cash in customer accounts which will be held at six licenced banks.

The Mastercard debit card will enable users to withdraw and spend money from their brokerage account, with the unspent balance swept into the FDIC-insured partner banks. Those banks include Wells Fargo, HSBC, Goldman Sachs, Citibank, U.S. Bank and Bank of Baroda.

It added that Cash Management feature is a part of its brokerage account and it works in conjunction with program banks. The Robinhood debit card is issued by Sutton Bank. The Cash Management feature will not lead to any foreign transaction fees or maintenance fees, and there are no account minimums, the company said.

Recently, Robinhood announced that its subsidiary Robinhood International Ltd. has received an authorization by the UK financial services regulator, Financial Conduct Authority, for the initiation of its operations in the UK as a broker.

Established in 2013, the fintech provides commission-free trading for stocks, ETFs, options, and cryptocurrencies. Robinhood had a valuation of $7.6 billion,  post its series E funding round in July, in which it raised $323 million from DST Global, Ribbit Capital, NEA, Sequoia and Thrive Capital.

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