Robinhood Cash Management Review: Hybrid / Savings Control, Low Fees
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You may like the Robinhood Cash Management Account if you are looking for a no-fee account – you will not pay a fee for using an off-network ATM or swipe your debit card abroad, and there is no monthly service charge.
However, you might not like the account if you want the ability to make withdrawals. If you swipe your debit card and the transaction would result in an overdraft on your account, Robinhood simply declines the transaction.
You will also only want to use the account if you receive your paycheck as a direct deposit. Currently, there is no way to deposit cash or paper checks into your Robinhood Cash Management Account.
The account pays a higher interest rate than traditional savings and
, but you can always find better rates elsewhere.
You may know Robinhood as a financial services company that makes investing easy. the Robinhood Cash Management Account is his hybrid savings and checking account. It pays a relatively high interest rate like a high yield savings account, but it comes with a debit card like a checking account.
To open a Robinhood Cash Management Account, you must also have a Robinhood Brokerage Account. Before the existence of the cash management account, you simply kept money in your brokerage account until you were ready to invest it in a stock or bond.
Now the company transfers your uninvested money to Robinhood Cash Management, and its partner banks pay interest on your money.
You will have free access to over 75,000 ATMs. If you are using an off-grid ATM, Robinhood will not charge a fee, whereas the ATM provider will.
The Better Business Bureau gives Robinhood an NR (No Rating) for reliability. Robinhood’s BBB score is on hold as the financial firm opened complaints on the previously closed BBB website.
Robinhood hasn’t necessarily had any scandals surrounding its cash management account – but it has come under intense scrutiny regarding its investment platform. Since you need to have a Robinhood brokerage account to be eligible for its cash management account, you might be concerned about issues with its investment platform.
Robinhood halted trading from AMC Entertainment (AMC) and GameStop (GSE) when prices spiked in January 2021, and it faces legal action over the move. In 2020, a young Robinhood user committed suicide after losing money through investments. Robinhood suffered backlash afterwards, but has since pledged to provide more educational material.
If you are concerned about the scandals surrounding Robinhood’s investment platform, you may decide to do business with another company.
We compared Robinhood to two other online investing platforms that have cash accounts: Wealthfront and Betterment.
Robinhood Review vs Wealthfront Review
Like Robinhood, Wealthfront has a single cash account to keep both your savings and your spending money, and you’ll earn interest on your entire balance.
You may prefer Robinhood if you travel internationally frequently. Robinhood does not charge an overseas transaction fee, but Wealthfront charges 2.75% of your purchase when you swipe your card overseas. If you withdraw money from a foreign ATM, Wealthfront charges an additional $ 2.50.
But you might like Wealthfront if you like receive your paycheck sooner. With Wealthfront, direct deposits can be processed up to two days in advance. You can also deposit checks and cash with Wealthfront, while you’re limited to direct deposits with Robinhood.
Robinhood Review vs Betterment Review
You may prefer Betterment if you want to continue checking and saving in two separate accounts. There is a Betterment chequing account and one Cash reserve account, which acts as a savings account. Having two accounts can make it easier to keep track of your money. But Betterment only pays interest on the money in your cash reserve account, while Robinhood pays interest on your entire balance.
You may also like the Betterment chequing account if you want to get cash back on your debit card purchases.
Laura Grace Tarpley is associate editor of banking and mortgage services at Personal Finance Insider, which covers mortgages, refinancing, bank accounts and bank reviews. She is also a certified personal finance educator (CEPF). In her four years of covering personal finance, she has written extensively on how to save, invest, and find loans.