> I remember the days when Citibank would give out 4% interest about a decade ago. now of course, it's about 0%. It's just classic bait and switch.

That's not a bait in switch, interest rates plummeted globally to the point a lot of people were happy to even get 0%!

Cash balances ensured by SIPC are safe to the coverage amount. 100% safe actually.

I’m sure they said that about Cyprus and Iceland too.

As far as I can tell, the coverage amount of 100,000 euros was respected in these cases, probably precisely to avoid doubts like that about the safety of deposits.

The UK and Dutch depositors in the Icelandic banks got bailed out by the UK and Dutch taxpayer.

Iceland's government/deposit insurance did not pull through.

Cyprus wasn't much different either.

https://www.telegraph.co.uk/finance/financialcrisis/11877219...

https://www.telegraph.co.uk/finance/financialcrisis/9965943/...

Your first link doesn't mention the insurance amount at all, the second only talks about deposits beyond the 100,000 euro limit and apparently British customers got an even better deal with the higher limit of £85,000.

If the SPIC fails to cover the cash balances to the coverage limits, the financial world as we know it stopped existing.

This are cash balances, not money market funds or any other funds.

Apparently the president of the SIPC stated that Robinhood didn't contact the SIPC before making their announcement. The SIPC president Stephen Harbeck is on record saying that "SIPC protects cash that is deposited with a brokerage firm for one limited purpose... the purpose of purchasing securities. Cash deposited for other reasons would not be protected. SIPC does not protect checking and savings accounts since the money has not been deposited for a protected purpose."

He later stated that the SEC would need to take the lead on clarifying the matter though.

I have a one-year emergency fund with Robinhood that is invested in index funds (secondary emergency fund as the primary emergency fund is in cash). I think I'll keep my primary emergency fund in the PNC high yield savings account for now until all that gets worked out.

Bloomberg says it's a money market account. https://www.bloomberg.com/opinion/articles/2018-12-13/robinh...

Robinhood's checking page says "Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account."

I have not dug thought this specific offering but here is how it works in general it works this way:

Account has 3 parts:

1. Marketable securities -- value is NOT insured.

2. Cash on hand -- value IS ensured.

3. Money market fund -- value is NOT insured.

(3) may or may not be offered and if (3) is offered it has to be elected by the account holder. Money cannot flow from (1) to (3) or from (3) to (1) bypassing (2) due to securities regulations -- one cannot pay for one security with another security, a settled cash must be used.

If the APY is on (2) they will get killed by the fatwallet/slickdeals crowd. If the APY is on (3) it is more complicated but debit/check transactions against (3) are very expensive to clear so I don't quite see what the play is.

> It's just classic bait and switch.

Are you unaware that interest rates today are drastically different than a decade ago?

The Federal funds rate is currently 2.00-2.25%.

A decade ago, the rate was 1.00%. (And three days later, it was 0.00-0.25%.)

all the other top savings accounts are currently 2% to 2.2%. i think they are not going to maintain that lead.

At this time it is not insured. The SIPC openly stated this.

The product is already being renamed as a "money management fund"