Robinhood is undercutting the big banks by forgoing brick-and-mortar branches with its new zero-fee checking and savings account features. With no overdraft or monthly fees, a juicy 3 percent interest rate, and a claim of more US ATMs than the five biggest banks combined, Robinhood is using the scalability of software to pass impressive perks on to customers. The free stock trading app already used that approach to attack brokers like E*Trade and Charles Schwab that charge a per trade fee. Now it’s breaking into the larger financial services market with a model that could put the squeeze on Wells Fargo, Chase, and Bank Of America.
Today Robinhood launches checking and savings accounts in the US with a Mastercard debit card issued through Sutton Bank that starts shipping December 18th. Users earn 3 percent on all the dough they keep with Robinhood, yet there’s no minimum balance or fees for monthly membership, overdrafts, foreign transactions, or card replacements. That’s a pretty sweet deal compared to the other leading banks that all charge for some of that or offer much lower interest rates. The tradeoff is that while customers get 24/7 live text chat support, they won’t be able to walk into a local bank branch. Users who want early access can sign up here.