Stock trading app Robinhood, which offers no-fee trading, is relaunching a checking feature called Cash Management after it was previously shelved due to regulatory issues.
As reported on Tuesday, the feature will enable customers to earn 2.05 percent APY on any money in the account – and they will be able to spend it with a distinctive Mastercard debit card.
Robinhood is valued at around $7.6 billion.
The last time it tried to offer a checking feature, the Securities Investor Protection Corporation – which is intended to insure investors’ funds – said the company was ineligible to provide the service because a checking account was never originally agreed upon.
Robinhood makes money from taking a piece of the interchange fees on debit card transactions with Sutton Bank, and from fees when the other banks get cash.
“We decided the best thing to do is [to give] people the peace of mind that their money is held at these banks, while trying to pay back the very best interest rates,” Bhatt said.
Any money, including from sales of securities or cryptocurrency, gets put into the partner banks, which include well-known institutions like Wells Fargo, Citibank and Goldman Sachs.