Robinhood has no account fees, but you pay in other ways
Robinhood does not charge you a monthly account fee, a deposit fee, or a withdrawal fee. You can open an account and hold cash or stocks without paying Robinhood directly for the privilege. However, "free" does not mean costless — the company makes money from your activity, and some of those costs show up in your trades.
The main ways Robinhood profits from your account are payment for order flow, margin interest, and premium subscription fees. Understanding each one tells you what you actually pay when you trade or borrow.
Key Takeaways
- Robinhood charges no monthly account fee, deposit fee, or withdrawal fee on standard accounts.
- When you place a stock or options trade, Robinhood receives payment from market makers for routing your order, which affects the price you receive compared to other brokers.
- If you borrow money to trade on margin, Robinhood charges interest rates that vary based on your account balance and the amount borrowed.
- Robinhood Gold, the premium subscription tier, costs $5 per month and includes margin borrowing and extended-hours trading.
- Cryptocurrency trades on Robinhood include a built-in spread that is not displayed as a separate fee but widens the gap between buy and sell prices.
Payment for order flow and what it costs you
When you buy or sell a stock through Robinhood, the company does not send your order directly to an exchange. Instead, Robinhood routes your order to a market maker — a firm that buys and sells securities constantly and profits on the difference between bid and ask prices. The market maker pays Robinhood for this order, and Robinhood keeps that payment.
This arrangement is legal and common across the brokerage industry, but it creates a conflict of interest: Robinhood has an incentive to route orders to whichever market maker pays the most, not necessarily the one that gives you the best price. The difference between the price you receive and the best available price on the market is called price improvement or the lack of it. Over many trades, this can add up.
You do not see a line item for this cost on your account statement. It is embedded in the bid-ask spread — the gap between what you pay to buy and what you receive to sell. Robinhood publishes quarterly reports on order routing and price improvement, but most retail traders do not review them.
Margin interest if you borrow to trade
Robinhood allows you to borrow money against your account balance to buy more securities than you could with cash alone. This is called margin trading, and it is not free. Robinhood charges interest on the amount you borrow, and the rate depends on your account balance and how much you borrow.
On a standard Robinhood account, you can borrow up to 2 times your buying power if you have at least $2,000 in the account. Robinhood Gold members can borrow up to 2.5 times. Interest rates on margin loans are tiered: the more you borrow, the higher the rate. As of early 2024, rates range from around 5% to 11% annually, depending on the tier, but these rates change and vary by account type.
If you carry a margin balance, interest accrues daily and is charged to your account monthly. You can view your current margin interest rate in the account settings under "Margin" or "Borrowing."
Robinhood Gold subscription and what it includes
Robinhood Gold is an optional paid tier that costs $5 per month. It is not required to trade, but it unlocks features that some traders want. The main benefits are higher margin borrowing limits (up to 2.5 times buying power instead of 2 times), access to extended-hours trading (4 a.m. to 8 p.m. Eastern Time instead of 9:30 a.m. to 4 p.m.), and access to Level II market data, which shows more detail about buy and sell orders.
Gold members still pay margin interest on borrowed funds at the same tiered rates as standard members. The $5 monthly fee is separate from any interest charges. If you rarely trade on margin or outside regular market hours, Gold may not be worth the cost.
Cryptocurrency spreads on Robinhood
When you buy or sell cryptocurrency on Robinhood, the company adds a spread to the price — a markup on buys and a markdown on sells. This spread is not listed as a fee; it is built into the price you see on screen. The spread varies by cryptocurrency and market conditions but typically ranges from 1% to 2% on each side of the trade.
For example, if Bitcoin is trading at $40,000 on the open market, Robinhood might show you a buy price of $40,400 and a sell price of $39,600. The difference between those prices and the market price is Robinhood's revenue from crypto trading. Unlike stock trades, there is no way to see the exact spread before you execute the trade.
Options trading and assignment fees
Robinhood does not charge a commission on options trades, but there are other costs. When an options contract you hold is assigned — meaning you are obligated to buy or sell the underlying stock — Robinhood charges $0.65 per contract. This is a real fee that appears on your statement.
Options trading also carries the same order-routing dynamics as stock trading: Robinhood profits from payment for order flow, which may affect the price you receive. Options spreads tend to be wider than stock spreads, especially for less-traded contracts, so the cost of entry and exit can be significant.
Frequently Asked Questions
Does Robinhood charge to deposit or withdraw money?
No. Robinhood does not charge deposit fees or withdrawal fees. Bank transfers to and from your Robinhood account are free. Transfers between Robinhood and another brokerage (called ACAT transfers) are also free, though they may take several business days to settle.
What is the difference between Robinhood and Robinhood Gold?
Robinhood is the free tier with basic trading and up to 2x margin borrowing. Robinhood Gold costs $5 per month and adds 2.5x margin borrowing, extended-hours trading, and Level II market data. Both tiers pay the same margin interest rates and both are subject to payment for order flow on stock trades.
Do I pay taxes on Robinhood trades?
Robinhood does not charge a tax, but you owe taxes on your gains. Robinhood reports your trades to the IRS on Form 1099 and provides you with a copy for your tax return. You are responsible for reporting capital gains and losses, whether short-term or long-term, based on how long you held each position.
Can I avoid payment for order flow by using Robinhood?
No. Payment for order flow is how Robinhood makes money on your trades, and it is built into the service. If you want to avoid it entirely, you would need to use a broker that charges commissions and routes to exchanges directly, though those brokers are rare for retail traders and typically charge higher fees overall.
What happens if I don't pay margin interest?
Robinhood deducts margin interest from your cash balance automatically each month. If your account does not have enough cash to cover the interest, Robinhood may liquidate positions (sell securities) to raise the funds. Repeated margin calls or failure to maintain minimum account balances can result in account restrictions or closure.