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The traditional banking system has ‘fleeced’ their unsuspecting customers through hidden charges on most services. Robinhood has intervened to salvage the deteriorating situation.
As the holidays approach, traditional banks get a taste of the wrath of their fintech rivals. The tussle comes in the form of the rate that financial institutions pay for clients’ deposits. This time it is not the online banks that are disrupting. It is the mobile trading app company, Robinhood, with a user base of at least six million.
Higher Interest Rates and Zero Fees
The app company is a millenials’ darling due to its no-fee mobile trading platform. Following September’s launch of new analyst tools, the company now announced the launch of a user-friendly savings and checking account that disburses 3% interest. That rate eclipses the online banks’ 2.25% and traditional banks’ 0.01% interests paid for saving accounts. With the interest rate set to compound every day, Robinhood amplifies the return on the money deposited in the account.
The 3% rate translates to an extra $240 gained per year for $8000 deposited in the account. Moreover, Robinhood Checking & Savings offers many other fee-free services. Some of the free services include card replacement, foreign transactions, and overdrafts. The company has not set any minimum amount necessary to open the savings account on the platform.
Users will enjoy services from at least 75,000 fee ATMs, free-of-charge, in various places like 7-eleven, Walgreens, and Target. The app is efficient since it also has an ATM map that lets users find the nearest one. Although the launch of this new service is set for 2019, the company is already allowing early access sign-up. During the announcement, Robinhood co-CEO Baiju Bhatt said:
“We as a company are striving to make the financial services industry more inclusive and are going to do that with zero commissions, a lower cost structure, and by relentlessly automating and building an engineering-first company. We are charging no fees, period!”
Robinhood Taking on the World
After their rigorous recent IPO preparations, the company decided to take the fight to the big banks. Since its launch in 2013, the company seeks relentlessly to disrupt the global financial industry. The fintech startup joins a list of several others venturing into the global financial space. They offer many services ranging from checking accounts to debit cards.
Free banking services are attracting more customers to Robinhood since the big-name banks charge hidden fees. According to the company’s blog post on the new services, they believe that users should earn more on their money. Moreover, the account owner should not face dubious charges to access their money. The post goes on to read:
“Currently, traditional checking and savings accounts cost more for people who make less, are riddled with unfair and hidden fees, and earn you minimal returns on your savings”
According to Robinhood, the Securities Investor Protection Corporation (SIPC) insures up to $250,000 of the cash deposited in the company. The CEO believes that once the product is rolled out, millions of loyal customers will take it up. Once that happens, Robinhood will rank among the fastest growing financial services companies worldwide.
Therefore, the company will offer ideal solutions to various challenges existing in the global financial systems.