Robinhood Review 2021: Pros, Cons and How It Compares

Robinhood offers commission-free stock, ETF and options trades, a streamlined trading platform and free cryptocurrency trading. But customer support is lacking, and the broker has run afoul of regulators.
Chris DavisOct 6, 2021

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Our Take

4.0

NerdWallet rating 

The bottom line: Robinhood provides free stock, options, ETF and cryptocurrency trades, and its account minimum is $0, too. Mutual funds and bonds aren't offered, and only taxable investment accounts are available.

Robinhood

on Robinhood's website

on Robinhood's website

Fees

$0

per trade

Account Minimum

$0

Promotion

1 Free Stock

after linking your bank account (stock value range $2.50-$225)

Pros & Cons

Pros

  • No account minimum.
  • Streamlined interface.
  • Cryptocurrency trading.

Cons

  • No retirement accounts.
  • No mutual funds or bonds.
  • Limited customer support.

Compare to Similar Brokers

Robinhood
Fidelity
SoFi Active Investing
NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Fees

$0

per trade

Fees

$0

per trade for online U.S. stocks and ETFs

Fees

$0

per trade

Account Minimum

$0

Account Minimum

$0

Account Minimum

$0

Promotion

1 Free Stock

after linking your bank account (stock value range $2.50-$225)

Promotion

Get $100

when you open a new, eligible Fidelity account with $50 or more. Use code FIDELITY100. Limited time offer. Terms apply.

Promotion

$5 to $1,000

in free stock for users who sign up via mobile app

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Become a NerdWallet member, and we’ll send you tailored articles we think you’ll love.

Full Review

Where Robinhood shines

Costs: Robinhood is a true discount broker — although its offerings may not be as robust as some other brokerages, Robinhood has some of the lowest costs in the industry.

Streamlined interface: Robinhood is extremely easy to use. So easy, in fact, some have argued that it’s made complex trading strategies, such as options trading, too accessible to inexperienced users. However, if your only goal is to dabble in stocks, the trimmed-down interface is highly convenient.

Free cryptocurrency trading: Robinhood is still one of the few brokers that lets you trade cryptocurrencies for free, so among stock brokerages, it’s a stand out feature. However, if you compare Robinhood’s crypto offerings to pure-play crypto brokerages, that shine starts to fade.

IPO access: In 2021, Robinhood unveiled a new offering that lets users take part in a company’s initial public offering, or IPO. This has typically been reserved for financial institutions.

Where Robinhood falls short

No retirement accounts: Robinhood only offers taxable brokerage accounts. So, if you park your money here long-term or are hoping to save for retirement, you’ll miss out on the tax benefits of retirement accounts like traditional and Roth IRAs. For most investors, investing through a taxable brokerage account should come only after they have started funding such a retirement account.

No mutual funds or bonds: The lack of mutual funds and bonds may make it difficult to build a truly diversified portfolio.

Limited customer support: Robinhood has made noticeable improvements to its customer service in the past year, but it’s still not on par with other brokerages.

Reliability: Robinhood has received criticism for untimely outages and trade restrictions amid market volatility, and has been charged by regulators for misleading customers, resulting in significant fines. We discuss these charges and other customer service issues in detail below.


Robinhood is best for:

  • Mobile users.

  • Individual taxable accounts.

  • Margin accounts.

Robinhood at a glance

Account minimum

$0 for brokerage account and for Robinhood Gold account.

Stock trading costs

$0.

Options trades

$0.

Account fees (annual, transfer, closing, inactivity)

No annual, inactivity or ACH transfer fees. $75 ACAT outgoing transfer fee. (Robinhood Gold costs $5 a month.)

Tradable securities

• Stocks.

• ETFs.

• Options.

• Cryptocurrency.

• American Depositary Receipts for over 650 global companies.

• Fractional shares.

Crypto offering

7 coins in 48 states.

Number of no-transaction-fee mutual funds

Not rated.

Trading platform

Web platform is purposely simple but meets basic investor needs.

Mobile app

Mobile trading platform includes customizable alerts, news feed, candlestick charts and ability to listen live to earnings calls.

Research and data

News available from WSJ Markets, Reuters, Barron's, CNBC Business and Cheddar. Gold members have access to research from Morningstar, Nasdaq, Nasdaq Totalview level II Market Data for an additional $5 per month.

Customer support options (includes how easy it is to find key details on the website)

Email, social media, in-app request-to-call service 24/7.

More details about Robinhood's ratings

Account minimum: 5 out of 5 stars

Robinhood doesn’t have an account minimum, which means investors can get started right away. Of course, in order to invest, you’ll need enough to purchase the investment you have your eye on.

Stock trading costs: 5 out of 5 stars

Robinhood provides 100% commission-free stock, options, ETF and cryptocurrency trades, making it attractive to investors who trade frequently. Still, these days many big-name brokers also offer free trades, so it makes sense to compare other features when picking a broker.

Options trades: 5 out of 5 stars

Robinhood’s commitment to low-cost trading is especially apparent in its options trading offering — Robinhood is among the handful of brokers that don’t charge a per-contract fee.

Account fees: 3 out of 5 stars

One of the biggest fees Robinhood charges is the $75 outgoing ACAT transfer fee — that cost is a bit on the high end, but it's not an unusual fee among brokers. (An ACAT transfer is when you want to transfer your investments to another broker; there's no fee for selling your investments and having the money transferred via ACH to your bank.)

Number of no-transaction-fee mutual funds: Not rated.

Robinhood does not offer any mutual funds.

Tradable securities: 1 out of 5 stars

The securities available to trade at Robinhood are limited. Mutual funds and bonds aren’t supported, which can help build a diversified, long-term portfolio. Robinhood does, however, offer access to more than 650 foreign companies via American Depository Receipts.

Like some other brokers, including Interactive Brokers and Charles Schwab, Robinhood has introduced fractional shares. That means you can pay as little as $1 for a portion of a share, even if that share's full price is in the hundreds of dollars. This feature makes it much easier to build a diversified portfolio — you're able to buy many more companies, even if you don't have a lot of money to invest.

Crypto offering: 5 out of 5 stars

Unlike many traditional brokerages, Robinhood users can buy certain cryptocurrencies right in their stock trading account. What's more, it's completely free. Pure-play crypto brokerages generally charge comparatively high fees for a similar service. And, Robinhood’s recurring stock investments feature extends to its crypto offering as well.

There is, however, a catch: You don't actually control the cryptocurrencies you buy. Rather, your only option is to buy them with USD, and sell them for USD. You won't be able to send the coins you buy, nor receive coins from another wallet. This also means you won't be able to take part in emerging applications of cryptocurrencies, such as decentralized finance programs. The list of available cryptocurrencies is also much smaller than you'll find at a true crypto brokerage. All this combined gave Robinhood's crypto offering a relatively low overall score in our analysis of the best crypto exchanges and platforms, which includes pure-play crypto brokerages like Coinbase and Gemini. But compared to other stock brokers, Robinhood's crypto offering stands out.

Trading platform: 3 out of 5 stars

If you’re accustomed to using a smartphone — and Robinhood's target user base obviously is — you’ll find the sign-up and account funding process quick and painless. It all happens within the app in a matter of minutes, with just a few quick questions that gather your personal information, contact details, Social Security number and means of funding your account. The company says approved customers are notified in less than an hour, at which point they can initiate bank transfers.

Robinhood uses instant verification with many major banks, sparing users the hassle of reporting micro-deposits to an account to verify information. This means bank transfers of up to $1,000 are available instantly for investing. Deposits larger than $1,000 will take four to five business days to process. We should note, however, that Robinhood has been the subject of complaints suggesting that signing up may be too easy. So while it’s true you can start investing with Robinhood in no time, users should be certain they understand the risks of investing before diving in.

Mobile app: 4 out of 5 stars

The app’s streamlined interface could be a negative, as the service doesn’t offer all the bells and whistles of a typical online stock broker. But for investors who know what they want, the Robinhood platform is more than enough to quickly place trades. It supports market orders, limit orders, stop limit orders and stop orders.

Research and data: 3 out of 5 stars

Though Robinhood's research offerings still pale in comparison to other brokers, the company has made strides to increase the tools and research available for customers, offering analyst ratings, lists of top movers, earnings calendars and links to earnings calls. Candlestick charts are available on mobile, and the service resurfaces information from other Robinhood customers to create its own universe of data. For example, investors can view the 100 most popular stocks on the platform and sort them by various criteria. They’ll also have access to a few reputable news sources, including Wall Street Journal Markets, Reuters, Barron’s and CNBC Business.

Customer support options: 3.5 out of 5 stars

In 2021, Robinhood rolled out a new customer support feature that lets users request a customer support representative call them back 24/7 for anything they need — a first for Robinhood. The in-app feature tells users they can expect a call back within 30 minutes of requesting it.

Other Robinhood details you should know

High-yield savings

Robinhood also offers a cash management account that currently pays 0.30%. The account comes with a debit card and free ATM withdrawals from more than 75,000 ATMs, and offers up to $1.25 million of FDIC insurance thanks to Robinhood's agreements with several banks.

Robinhood Gold

Robinhood Gold offers investors the ability to trade on margin. The opt-in service carries a flat monthly fee of $5.

New investors should be aware that margin trading is risky. You’re trading on money borrowed from the broker, which means you can lose more than you invest. (Here's more on how margin trading works.)

Reliability and trustworthiness

Robinhood has been the subject of serious complaints and lawsuits over the years, which potential users shouldn’t ignore:

  • In December 2020, Robinhood was charged by the Securities and Exchange Commission for misleading customers. The SEC found that “Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices,” and that in aggregate, those inferior prices deprived customers of $34.1 million, even after accounting for savings from Robinhood’s commission-free trade offering. Robinhood agreed to pay $65 million to settle the charges.

  • Also in December 2020, the Commonwealth of Massachusetts accused Robinhood of aggressively attracting inexperienced investors to its platform and using gamification techniques to manipulate customers. The complaint also states that many Robinhood users were given access to advanced — and risky — options trading products, even when they identified as having no or limited investment experience. In August 2020, Robinhood announced plans to hire hundreds of new customer support representatives.

  • In January 2021, the app came under fire for its decision to restrict trading during the extreme market volatility surrounding GameStop and other heavily shorted stocks. And while the market conditions led other brokerages to take precautions, Robinhood’s restrictions were more expansive.

  • Throughout the surge of new investors during 2020 and into 2021, Robinhood — along with other brokers — experienced outages and other technical issues that disrupted service. Both the outages and the January 2021 restrictions led to class-action lawsuits.

  • On June 30, 2021, FINRA announced it fined Robinhood $57 million and ordered it to pay approximately $12.6 million to thousands of customers who suffered “significant harm” at the hands of the brokerage. FINRA said millions of customers had received false or misleading information from Robinhood, and millions were affected by system outages during the March 2020 market volatility. What’s more, FINRA found that algorithmic bots had approved thousands of customers for options trading, even if those users weren’t eligible or had red flags in their account that would have prevented them from taking part in the advanced trading strategy. The $70 million total marked the largest financial penalty ever levied by FINRA.

» Learn more about alternatives to Robinhood

Is Robinhood right for you?

If a streamlined trading platform or the ability to trade cryptocurrency are important to you, Robinhood is a solid choice. But now that plenty of online brokers have joined Robinhood in offering commission-free trades, casual investors can afford to shop for the broker that suits them best. Interested in other brokers that work well for new investors? See NerdWallet’s rankings of the best brokers for beginners.

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on Robinhood's website