Overview / Commentary
3200 Ash Street
Palo Alto, CA 94306-2239

Robinhood is a brokerage firm largely known for offering commission-free trades. In late 2018, the firm seemed ready to diversify its offerings with a new set of deposit products — checking and savings accounts. With each earning 3% APY, the accounts would have easily become one the most competitive bank account offerings on the market.

The company set up a waitlist to give consumers a first crack at enrolling when the accounts officially launched in early 2019. However, Robinhood quickly ran into legal problems and as of Dec. 14, the future of the accounts are now uncertain.

Since Robinhood is not a bank and did not partner with a bank to hold deposits, these accounts would not be FDIC insured.

As a brokerage firm, Robinhood is insured by the Securities Investor Protection Corporation (SIPC). The SIPC was created under The Securities Investor Protection Act of 1970, which states that the organization will only insure customers’ securities and cash used for the purpose of buying securities.

This would protect any cash claims up to $250,000 in your Robinhood investment accounts should the firm fail financially. Robinhood, which intended to invest deposits into its Checking and Savings accounts in U.S.-listed securities, assured its customers that any deposits made into the new accounts would also be SIPC-insured. In reality, that’s not possible. The SIPC does not cover cash deposits made in order to earn interest, like Robinhood’s Checking and Savings accounts.

This stark disconnect “raises questions of the legitimacy and trustworthiness of Robinhood and these new accounts,” said Ken Tumin, founder of

Just a day after Robinhood’s announcement, Stephen P. Harbeck, president and CEO of SIPC, voiced his concerns about these new accounts and their SIPC insurance eligibility. Later that day, Robinhood pulled its Checking and Savings accounts from its website. In their place, is an advertisement for a “Cash Management” option noted as “coming soon.”

“We plan to work closely with regulators as we prepare to launch our cash management program,” said Baiju Bhatt and Vlad Tenev, Robinhood co-founders and co-CEOs in a statement posted on Robinhood’s blog. “Stay tuned for updates.”

There are no further details on what this new product will include or how it will be structured.

Robinhood, founded in 2013 and headquartered in Menlo Park, Calif, has a valuation of $5.6 billion.

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Robinhood Announces 3% Checking & Savings - Major Things to Consider - 12/14/2018

The brokerage firm Robinhood has started promoting its new “Checking & Savings” with a 3% interest rate. News of these accounts has been grabbing savers’ attention.

Robinhood 3% Checking And Savings Accounts - 12/13/2018

Robinhood, the brokerage that offers free stock trades with its phone app, will be adding checking and savings accounts in early 2019 that pay 3% interest. There are no fees, no minimum balance is required, and no maximum balance is listed (as far as I can see). The accounts allow you to pay bills, send and receive checks, use direct deposit, and include a Mastercard debit card. It is important to note that the accounts are not insured by the FDIC, but do have Securities Investor Protection Corporation (SIPC) insurance up to $250,000. This is not a traditional bank checking or savings account, but appears to be essentially a cash holding account that brokerages typically offer as a place to put money before and after stock market investments. I am not making a recommendation for or against use of this product; it is brand new and more information, including user experiences, will be helpful, but thought I would share this with the DA community. I would view this as a positive deve


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Robinhood is an Internet only bank and does not have branch locations. Its headquarters is located at 3200 Ash Street - Palo Alto, CA 94306-2239

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