Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now?
If they use longer term bonds, they will face potential losses as those tend to be volatile relative to interest rate changes. If they use higher-yielding corporate bonds, they face default risk.
There's something critical that's not being explained here which is important, and I wouldn't want to put my money in something like that without understanding it thoroughly.
> Can anyone explain to me how they are able to offer 3% when 1 year treasury notes are less than 3% right now?
It's a deal to get more trading accounts opened, both directly (people coming to RH for these accounts, which are not separate from trading accounts) and indirectly (e.g., it's a waitlisted feature that you move up in the waitlist by referring people to RH.)
They don't need to make money on the savings feature considered in isolation.
If they use longer term bonds, they will face potential losses as those tend to be volatile relative to interest rate changes. If they use higher-yielding corporate bonds, they face default risk.
There's something critical that's not being explained here which is important, and I wouldn't want to put my money in something like that without understanding it thoroughly.