Robinhood announced their cash management feature, which allows you to draw high yield interest (currently 1.8%) on your uninvested cash. Lets take a look at what the cash management account really is - the good, the bad, and the ugly. Afterwards we'll get a first look at the actual Robinhood cash management card, which I recently received in the mail! ✅ Get a free stock for opening an account on Robinhood:
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In October 2019 Robinhood announced a new feature called the cash management account. This was in the midst of the zero fee trading war that was going on as Charles Schwab had recently announced that they were eliminating trading fees, which forced other brokers to follow suite. Robinhood already had 0 fee trading, so this was a jab at Robinhood and an attempt to take away some of their customer base.
Of course Robinhood didn't take it lying down, and they soon after announced their cash management accounts. This was something that set them apart, and sent them back to the top.
The cash management account allows you to earn high yield interest on your uninvested cash. When this feature was first announced it was 2.05%, but it is currently 1.8%. This is a variable rate, and will pretty much track the rate of a high yield savings account. You can use these funds with the Robinhood debit card, which I unbox in this video to give you a first look. You can also use these funds on the Robinhood platform to purchase stocks with your brokerage account.
Previously, when you had uninvested funds on your account, they just sat around and drew no interest. With this new feature, those uninvested funds will pretty much be as good as if they were in your savings account.
Traditional savings accounts do not have a debit card, those are usually only available to checking accounts. But, traditional checking accounts have low interest rates, high yield is only available on savings accounts. Not to mention, nobody combines a brokerage account with a checking or savings account.
That is exactly what makes the Robinhood cash management an alluring alternative to traditional banking, by essentially combining all the positive elements of a checking, savings, and brokerage account in one convenient place for you to manage everything together as one account.
You get the benefits of a high yield savings account (1.8% interest).
You get the benefits of a checking account with the debit card, and ability to make withdraws and purchases.
You also get the benefits of a brokerage account, with the ability to purchase stocks whenever you want, just like you have always been able to do with Robinhood.
To get access to the cash management account you need to have a Robinhood account. If you don't already have an account, you can make one here, and get a free stock for signing up:
After signing up, you can join the wait list to gain access to the cash management account here:
Let me know your thoughts on the cash management account in the comments below!
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