It’s hard to believe that it’s now been more than a year since the stock trading app Robinhood announced it was launching a cash management account. That offering — then dubbed Robinhood Checking & Savings — was quickly scrapped, but the core of the idea was resurrected late last year when the company once again opened up the waiting list for its Cash Management product. At long last, I’ve made it off of that waitlist and now have the long-awaited Robinhood debit card in my hot little hands. So… was it worth it?
Let’s take a look at what Robinhood’s Cash Management account has to offer and how it stacks up against other options that are out there.
Editor’s note: this article was last updated in March 2020 with the latest APY information, including the Fed’s 1% emergency rate cut.
The Features of Robinhood Cash Management and My Experience
The main features
Before we get into my experience with the Robinhood Cash Management account, we should probably discuss what it has to offer. First, the account functions as a hybrid checking and savings account (hence the original name) — although Robinhood is not actually a bank. Thus funds deposited into Cash Management accounts will be swept to partner banks, which include FDIC insurance.
What’s nice about the hybrid set-up is that you’ll earn interest on all of your funds — not just savings. Even better, that interest rate is relatively strong (especially when compared to brick and mortar banks), currently set at .30% APY. Sure, it’s not the 3% that was originally teased but, hey, it’s still pretty good [or was before the emergency rate cuts].
Next, Robinhood’s debit card be used to access funds at more than 75,000 ATMs without incurring a fee. These ATMs must be part of the Allpoint or MoneyPass networks. Thankfully there’s a handy tool in the app to help you find such ATMs and avoid fees. Sure enough, when I looked, there were plenty of free ATMs in my area — and I was able to go pull $20 out of one without any issue or fee.
Speaking of fees, Robinhood Cash Management doesn’t have any. There are no maintenance fees, inactivity fees, or even fees for replacement cards. Also notable is there are no foreign transaction fees for debit card purchases, allowing you to use the card anywhere in the world MasterCard is accepted.
Signing-up for Robinhood Cash Management
As I alluded to in my intro, Robinhood currently maintains a waitlist for their Cash Management account. Having signed up on day one of said list, I finally made it off of it just a week or two ago. The company says it’s been rolling out the product to more customers on the waitlist each week but it’s unclear when it will be fully available.
In any case, when it was my turn to join the ranks of account holders, I had the opportunity to confirm which card design I wanted — green, white, black, or American flag. I ended up sticking with green but I appreciated being asked since it has been quite a while since I initially signed up. Also notable is that there was the option to forgo receiving a physical card and to just generate a digital-only debit card instead.
Getting your account set up
Once I was done ordering my card, the tab that previously featured my spot in line was transformed into an actual Cash Management tab. This gave me the opportunity to view my debit card number, which then allowed me to add the card to Apple Pay even though my physical card had yet to arrive. Naturally I could also transfer money over to my new account by either selecting a bank account I had previously linked for my brokerage account or adding a new account.
The debit card’s arrival
Knowing that I wanted to have this review ready for today (a Tuesday following a three-day weekend), I was a little concerned when it seemed that I wasn’t receiving any envelopes in my Friday mail delivery. However it turns out that Robinhood’s debit card shipments are actually parcels, sent in puffy, protected envelopes. After opening the envelope, I could see why the additional care was needed.
Instead of simply finding the card attached to a piece of paper like most cards would come, the Robinhood debit card was encased in a clever contraption that pushed the card out one side when a tab on the opposite side was pulled. If that sounds confusing, I’ll refer you to my handy .gif above. Obviously this doesn’t have a ton to do with the quality of the account or whether it’s worth having… but I was impressed with the extra bit of flash Robinhood added to the product’s presentation.
Anyway, after I managed to stop myself from playing with the packaging, I headed to the Robinhood app to actually activate the card. This took just a couple of taps.
When you first set-up your Cash Management account, there’s actually a chance you may already have an available balance. That’s because, if you have any Buying Power available on Robinhood — either by transfers, stock sales, or dividends — it will roll into your Cash Management. This also means you’ll start earning interest on these funds right away.
Of course, chances are you’ll want to add to that balance as well. To do this, you’ll have a few different options. The first is to simply initiate a transfer from a linked bank account (or link a new one). Here’s where one minor gripe I have comes in: while I appreciate Robinhood offering a timeline of when your funds will start earning interest and when the deposit is expected to be completed, I wish this was displayed before the transfer has been initiated. Instead, you won’t find it until you’ve already submitted your request.
If you’re already a Robinhood user, you may know that transferring funds to your account usually makes them available instantly (as long as the amount is under $1,000). Well, the same applies when depositing funds through the Cash Management tab. This doesn’t mean that your money will be available to withdraw via ATM or debit purchase right away, but it will still be added to your Buying Power for stock trades. While this isn’t really a change, it’s still nice to have this option while you wait for your money to fully clear.
For those looking to make deposits to their Cash Management account on a more frequent basis, there are options for that as well. This includes setting up direct deposit so that your payroll checks go right into your account on payday. In order to set this up, you can either enter your routing and account info into your company’s payroll portal or request that Robinhood send you a direct deposit form you can then pass along to your company’s human resources or payroll department.
Lastly you can also set up recurring automated transfers. These can be arranged to occur on a weekly, bi-weekly (twice a month), monthly, or quarterly basis. Disappointingly, it doesn’t seem as though there’s a way to further customize these options. For example it notes that weekly transfers will initiate every Monday, bi-weekly will happen on the 1st and 15th, etc. It really seems that Robinhood could just go the extra mile and allow users to pick the day of the week or date of the month for themselves but it is what it is.
As I mentioned at the top, Robinhood’s Cash Management offers an impressive .30% APY (as of March 17th, 2020 post emergency rate cut). Even better, one interesting feature I noticed is that you can monitor how much interest you’ve accrued in a given month by checking the Cash Management tab. Granted, these funds aren’t actually paid until the last day of the month but it’s cool and novel to be able to see what you’re getting ahead of time.
Managing your card and location protection
Via the Cash Management tab of the Robinhood app, you can also manage aspects of your card. By tapping the card icon, you can view your card number as well as lock your card if need be. Here you can also change your PIN, which you’ll need for certain purchases as well as for pulling money out at ATMs.
On the topic of card security, one fairly unique feature is Location Protection. According to Robinhood, when this option is turned on, they’ll decline debit card transactions that are made far away from the location of your phone. As they state in their Help Center, “For example, if you’re in Arizona (based on location information from your phone) but your card is swiped in Wyoming, we’ll decline that transaction.” Obviously, in order to activate this feature, you’ll need to make sure you allow Robinhood to use your location.
If you are making purchases out of range of your phone or just want to opt-out of Location Protection in general, you can always turn this feature off. However, oddly, this toggle is not located in the Cash Management tab where other options like Lock Card are. Instead you’ll need to head to your general Robinhood setting and then select Cash Management in order to find the Location Protection option.
Robinhood Cash Management vs. SoFi Money
At first glance, Robinhood Cash Management and SoFi Money might seem like fairly similar offerings. After all, both are hybrid-style accounts that come from FinTech companies. So how similar are they actually? Here’s a quick rundown of how these two accounts stack up against each other.
Interest rate on savings
If it’s APY you’re after, then Robinhood gets the point here — or two-tenths of a point, that is. Currently Robinhood’s Cash Management offers .30% APY compared to .10% for SoFi Money. However it is important to note that these figures can (and do) fluctuate fairly often, so what’s true today may not always be. Moreover it must be mentioned that both of these interest rates absolutely crush what mainstream big banks boast. Therefore, unless you’re stashing a ton of cash where that 0.2% would add up, this might not be as much of a factor as you’d think.
When you’re dealing with a banking account that doesn’t come with brick and mortar branches, having the ability to pull cash out of an ATM is a must. Luckily Robinhood has that, offering fee-free access to more than 75,000 machines. However SoFi goes a step further, reimbursing fees you may incur at any ATM in the world. With that, I think you can guess which one I find to be the better offering in this category.
Finally, if you’re looking to use either one of these accounts more than a purely auxiliary banking tool, Robinhood might not have everything you need. At this time, the Cash Management account supports direct deposit for incoming funds and ACH for outgoing but doesn’t yet allow users to deposit paper checks nor does it offer checkbooks. Meanwhile SoFi not only allows you to deposit checks by taking photos of them but you can also request a book of paper checks to use for rent, taxes, etc. (something I’ve actually done as of late). Hopefully this is something Robinhood fixes in the future, although it’s unclear if these sort of features are really their focus.
As you can probably tell, for the time being, I still prefer SoFi Money to Robinhood Cash Management. While the overall experience that each provides make this pretty much a toss-up, the worldwide ATM reimbursements put SoFi over the top for me. Plus, with SoFi teasing more perks to come via their recently-announced partnership with Mastercard, it’s possible it will pull further ahead in the coming months. Still, with Robinhood being so new to the field, it too has the potential to make some waves down the road.
Final Thoughts on the Robinhood Cash Management Account
Overall, there’s a lot to like about Robinhood Cash Management account — especially if you’re already using the app to trade stocks. With a strong APY, a decent selection of fee-free ATMs, no foreign transaction fees (or other fees, for that matter), and more, the account could certainly come in handy. That said, in its current form, it doesn’t quite live up to the “Checking & Savings” pitch it originated as.
Personally, I would like to see Cash Management expand to offer more features that other online banks already employ. This includes the ability to deposit checks or even write checks. I’d also love to see the debit card include cashback features or other perks.
As an extension of Robinhood’s brokerage accounts, Cash Management is kind of a no-brainer as it provides an interest-earning home for the funds you aren’t currently putting into the market. Additionally Robinhood does definitely get points for creating a sleek user experience and spiffy-looking card — complete with eye-catching packaging. With all that, I think the Robinhood Cash Management account is worth having… even if it might not quite live up to the hype.
Originally published at Dyer News.