Robinhood CEO: Bank Customers ‘Ripped Off,’ Offers 5% APY

Robinhood, the inventory buying and selling app that made a reputation for itself through the GameStop frenzy of 2021, is preventing to regain misplaced floor amid an exodus from the platform and falling inventory costs.

The corporate will now pay subscription prospects a 5% annual share yield (APY) on uninvested money — considerably above funds from conventional banks, which Robinhood CEO Vlad Tenev says have lengthy been duping prospects, CNN reported.

Picture Credit score: Getty Pictures. Robhinhood CEO Vlad Tenev.

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“Clients are starting to get up and notice that they’ve been getting ripped off by these conventional monetary establishments,” Tenev informed the outlet. “These banks are principally producing all of this income that they are not sharing with prospects. We see a possibility to appropriate that.”

Robinhood’s 5% APY is likely one of the highest within the business. Betterment, which gives a 4.75% APY; Wealthfront, which gives as much as 5.5% APY; and Empower, which gives 4.7% APY, are among the many different high contenders, per Investopedia.

However in contrast to the others, which have $0 month-to-month upkeep charges, Robinhood prospects can solely lock in that 5% fee in the event that they pay $5 per thirty days for a Gold subscription. The remaining must accept 1.5% APY — no 5%, however nonetheless a lot increased than the nationwide common of .58% reported by Bankrate.

“It is kind of like banks have assumed that prospects aren’t savvy or clever sufficient to comprehend that charges are altering, they usually could possibly be producing a better risk-free fee of return on their funds backed by the US authorities,” Tenev informed CNN.

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When the outlet approached the American Bankers Affiliation for remark, spokesperson Jeff Sigmund famous that “Robinhood can solely provide FDIC safety on a few of its merchandise as a result of it companions with FDIC-insured banks.”

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