Robinhood Review 2024: Pros, Cons and How It Compares
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Our Take
4.5
The bottom line:
on Robinhood's website
Pros & Cons
Pros
Commission-free stock, options and ETF trades.
Streamlined interface.
Cryptocurrency trading.
IRA with 1% match (3% for Gold members).
High interest rate on uninvested cash.
Cons
No mutual funds.
Little third-party research.
Compare to Similar Brokers
Current Product
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Fees $0 per trade | Fees $0 per online equity trade | Fees $0.005 per share; as low as $0.0005 with volume discounts | Fees $0 |
Account minimum $0 | Account minimum $0 | Account minimum $0 | Account minimum $0 |
Promotion 1 Free Stock after linking your bank account (stock value range $5.00-$200) | Promotion None no promotion available at this time | Promotion Exclusive! U.S. residents who open a new IBKR Pro account will receive a 0.25% rate reduction on margin loans. Terms apply. | Promotion Earn up to $10,000 when you transfer your investment portfolio to Public. |
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Full Review
In this review of Robinhood
Where Robinhood shines
IRAs with 1% match: One feature that sets Robinhood apart from other IRA providers is the 1% match on contributions (3% for Gold members). That feature was a first among non-employer-sponsored retirement accounts.
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. This includes options trades, which don't carry a contract fee.
Free cryptocurrency trading: Robinhood offers access to more cryptocurrencies than any other stock trading app we review, and they're free to trade. However, if you compare Robinhood’s crypto offerings with pure-play crypto brokerages, that shine starts to fade. Crypto is also not available in Robinhood IRAs.
24/5 stock trading: Robinhood's 24 Hour Market feature offers customers the ability to place limit orders any time between 8:00 p.m. Sunday and 8:00 p.m. Friday.
IPO access: Robinhood lets users take part in a company’s initial public offering, or IPO. This has typically been reserved for financial institutions, though more brokerage firms are now offering this access.
Where Robinhood falls short
No mutual funds or bonds: The lack of mutual funds and bonds may make it difficult to build a truly diversified portfolio. Customers can only access bonds via bond ETFs.
Limited research & data: Robinhood's third-party research, data and news offerings pale in comparison to many of the other brokers we review. Morningstar and Nasdaq Level II market data are the only choices, and they're only available to Gold members.
Alternatives to consider:
For mutual funds & bonds: Charles Schwab, Firstrade
For research & data: Interactive Brokers, Webull
What type of investor should choose Robinhood?
Mobile users. Many of Robinhood's competitors have imitated elements of its app, and it's easy to see why. It offers one of the smoothest and easiest trading experiences of any broker we review (although as we'll discuss below, that ease-of-use may be a double-edged sword for some users).
IRA investors. Robinhood is still among the only non-employer-sponsored IRA providers that offers a percentage match on contributions consistently — not just as a limited-time promotion. The 3% match that Gold users get is comparable to the contribution matches offered by some employers in 401(k) accounts.
Margin traders. Robinhood offers some of the lowest margin rates of any broker we review: just 5.7% to 6.75%.
What the Nerds think 🤓
"Robinhood is still a standout for easy signup and quick and streamlined mobile trade execution, the latter of which arguably has upsides and downsides. Buying and selling stocks is simple and intuitive and has few 'are you sure?' interruptions, which is great for beginners or trading on the go. But could potentially make it too easy to do something impulsive.
"It took me about nine seconds, including opening the app and entering my passcode, to sell some shares I had, thanks in large part to the seamless 'swipe up to confirm' ordering interface."
Robinhood at a glance
Account minimum | $0 for brokerage accounts, Robinhood Gold accounts and IRAs. |
Stock trading costs | $0. |
Options trades | $0. |
Account fees (annual, transfer, closing, inactivity) | No annual or inactivity fees. $100 ACAT outgoing transfer fee. Robinhood Gold costs $5 a month. Matching funds in IRAs may be taken back if money is withdrawn in less than five years. Instant withdrawals cost a minimum of $2 and a maximum of 1.75% of the amount withdrawn. |
Interest rate on uninvested cash | 0.01% for free accounts, 4.5% for Gold accounts. |
Tradable securities | Stocks, ETFs, Options, Cryptocurrency, American Depositary Receipts for over 650 global companies, Fractional shares. Bonds only available in the form of bond ETFs. |
Number of no-transaction-fee mutual funds | Not available. |
Trading platform | Robinhood's mobile and web platforms are known for their smooth sign-up, funding and trading processes. The broker now also offers a desktop platform, Robinhood Legend. |
Mobile app | Mobile trading platform includes customizable alerts, news feed, advanced charting and ability to listen live to earnings calls for some companies. |
Research and data | Access to professional research from Morningstar and Level II market data from the Nasdaq Stock Exchange (with Gold subscription). |
Customer support options (includes how easy it is to find key details on the website) | 24/7 chat support. Phone support available from 7:00 a.m. ET to 9:00 p.m. ET, Monday - Friday. |
» Looking to switch brokers? View the best broker promotions right now
How to sign up for a Robinhood account
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, saving 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.
What to know about Robinhood's fees
Robinhood provides 100% commission-free stock, options, ETF and cryptocurrency trades, making it attractive to investors who trade frequently. However, some of its account fees put it at a disadvantage to its competitors.
One of the biggest fees Robinhood charges is the $100 outgoing ACAT transfer fee — that cost is on the high end. (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.)
Robinhood also puts a sort of penalty on its IRA matching program: If you take money out of a Robinhood IRA after less than five years, Robinhood will take back the corresponding amount of the 1% match (3% for Gold) that you withdrew.
Only Robinhood Gold accounts earn a substantial interest rate on uninvested cash, get a 3% match in IRAs instead of 1%, and have access to live market data. Gold costs $5 per month.
Robinhood's trading platforms and apps
Robinhood's trading platform gets relatively high marks for its charting features, which allow customers to view technical indicators like moving averages. It also allows investors access to OTC stocks and IPOs, and allows trades any time between 8 p.m. Sunday and 8 p.m. Friday, Eastern time.
In October 2024, Robinhood launched Robinhood Legend, a free desktop platform with more advanced charting features and customizable layouts. Legend offers users enhanced chart capabilities — including the ability to see a variety of technical indicators, use drawing tools and set custom time intervals — that could come in handy for day trading. The launch of this desktop platform, which offers more sophisticated features than the mobile app, shows that Robinhood is expanding its offerings for advanced traders.
How we nerd out testing trading platforms
Our reviewers — who are writers and editors on NerdWallet’s content team — hands-on test every online broker platform in our analysis. That way, we’re able to report on every aspect of the user experience, from funding a new account to actually placing trades.
We score each broker against a set of criteria that factors in both the capabilities offered and the actual user experience of trading with those capabilities. This includes how easy it was to sign up for and fund a new account. Note that a broker may score very highly for the platforms it offers, but low for the experience of actually using that platform. These are scored separately in our analysis, and they are weighted evenly when factored into the broker’s overall score. This means a broker can offer an advanced trading platform, but if it is clunky to use or the process of opening an account is unnecessarily arduous, that will be reflected in their score.
However, Robinhood loses marks in the trading platform category due to accepting payment for order flow (PFOF). In the last few years, regulators have expressed concern that the PFOF business model is a conflict of interest; it involves market-making firms paying brokers to route customer orders through them. Although its effects are negligible for most investors, it's possible PFOF brokers could execute orders slightly slower or at slightly worse prices than non-PFOF brokers. Robinhood reported its order execution quality is 95.62%, slightly worse than the average among brokers we review.
The average execution quality of all brokers we review was 96.95% as of Oct. 16, 2024. That means 96.95% of orders sold for at a price that was at or better than the National Best Bid and Offer. Executing at or above the NBBO means you may receive a price improvement or a better share price than you were originally quoted.
Robinhood's investment selection
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. It also offers exchange-traded funds, including index and bond ETFs, and it's working on launching futures trading in the months ahead.
Like some other brokers, including Interactive Brokers, Fidelity and Charles Schwab, Robinhood offers fractional shares. That means you can pay as little as $1 for a portion of a share, even if that stocks' full share price is in the hundreds of dollars. This feature makes it much easier to build a diversified portfolio — you're able to buy stock in many more companies, even if you don't have a lot of money to invest.
Robinhood's taxable brokerage accounts allow margin trading, and offer some of the lowest margin rates in the business. Margin trading is not available in IRAs.
Crypto offering: Unlike many traditional brokerages, Robinhood users can buy 15 cryptocurrencies right in their taxable brokerage account. What's more, it's almost entirely free — the only non-network fee that Robinhood charges is 0.5% to 1.5% for purchasing crypto with a debit card.
Robinhood’s cryptocurrency trading is available in every U.S. state, although Stellar (XLM), Tezos (XTZ), Uniswap (UNI) and USD Coin (USDC) are not available in New York, and USDC is not available in Texas. You can begin trading with as little as $1. Crypto-crypto trading pairs are not available, and staking is only supported for Solana (SOL) at the time of last update.
The list of available cryptocurrencies is much smaller than you'll find at a true crypto brokerage, but it's among the largest selections of any stock trading app we review. Robinhood only offers crypto trading in taxable brokerage accounts — not in IRAs. Customers can withdraw crypto from Robinhood to a wallet of their choice.
Other key Robinhood features
Customer support
Robinhood's customer support features include 24/7 in-app chat, and extended-hours phone support available from 7 a.m. to 9 p.m Eastern time, Monday - Friday.
Robinhood also has an easily-navigable website, and a library of hundreds of educational articles as well as the "Investor's Guild" blog of expert commentary, plus a YouTube show.
IRA account
As mentioned above, Robinhood IRAs come with several features that are unusual for non-employer-sponsored retirement accounts, including a 1% match on contributions and a 3% match for Gold members (subject to a take-back provision if funds are withdrawn in less than five years), instant deposits up to $1,000, and recommended portfolios of ETFs. (Here's more on how Robinhood IRAs work.)
on Robinhood's website
on Robinhood's website
$0
$0
1% match
on eligible contributions up to IRA contribution limits.
Robinhood Gold
Compared with Robinhood's free account tier, Robinhood Gold pays investors higher rates on uninvested cash, matches a higher percentage of IRA contributions, and provides access to research from Morningstar and market data from Nasdaq. The opt-in service carries a flat monthly fee of $5.
Robinhood Gold members get over 4% interest on their uninvested brokerage cash — one of the highest interest rates among similar brokers — and that money is swept into an affiliated bank account.
Gold members are also eligible for the Robinhood Gold Card, a credit card that offers 3% cash back on all purchases, and 5% cash back on travel purchases booked through the Robinhood travel portal. The card has no additional annual fees and no foreign transaction fees, and comes with perks like concierge service.
It's worth asking yourself if you really need those features when deciding whether or not Robinhood Gold is worth it for you.
Spending account
Robinhood also offers a spending account that comes with a debit card and $250,000 in Federal Deposit Insurance Corporation insurance via agreements with partner banks. The spending account allows users to send or receive money, set up direct deposit, and set up recurring investments from their paycheck.
Robinhood spending accounts also come with some unusual features, such as an opt-in program that lets users get their direct deposit paychecks up to two days early. Users can also opt to have their debit card transactions rounded up to the next dollar, with the extra change invested in stocks or funds. This round-up feature is similar to the round-up investing tactics made famous by robo-advisors Acorns and Stash.
Good to know about Robinhood
Subpar execution quality
As mentioned previously, Robinhood's execution quality is 95.62%, slightly below average. This may not make a difference for casual investors, but if you're doing a lot of day trading with a lot of money, you may want to look into brokers with higher execution quality — in particular, brokers that don't accept PFOF at all, such as IBKR Pro.
Is Robinhood safe?
Robinhood has not had any known major security incidents since 2021. But given the broker's checkered past, investors must determine for themselves whether Robinhood is safe enough to use.
How is Robinhood insured and regulated?
All investment comes with a risk of loss, but Robinhood carries several types of insurance that would protect customer funds in the event that Robinhood or its partner banks became insolvent.
Robinhood carries Securities Investor Protection Corporation (SIPC) insurance, which protects up to $500,000 per account, with a cash sublimit of $250,000. It has also purchased additional SIPC coverage which protects up to $50 million per account, including up to $1.9 million in cash .
Uninvested cash in Robinhood's cash sweep program and spending accounts is also covered by FDIC insurance, which protects up to $250,000 per account.
The broker is also regulated by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, which police it for violations of securities laws and industry standards — although it's worth mentioning that over the years, Robinhood has been penalized several times for such violations.
Trust, safety and reliability
Robinhood has made efforts to reassure investors about the safety of its platform — including a guarantee that it will reimburse 100% of direct losses due to unauthorized account activity that isn't the fault of the customer.
However, Robinhood has been the subject of serious complaints and lawsuits over the years, which potential users shouldn’t ignore:
On Jan. 18, 2024, Robinhood agreed to pay a $7.5 million fine over charges from Massachusetts securities regulators, who argued Robinhood used gamification tactics and in-app experiences like confetti and emojis to encourage riskier trades and strategies. While the issue was settled in 2024, we should note Robinhood had already discontinued some of these features, such as confetti, in 2021, after the case was initially filed.
On Nov. 8, 2021, Robinhood announced a data security incident that revealed personal information for a portion of account holders, including email addresses, full names and, in limited cases, dates of births and ZIP codes. The company said it doesn't believe bank account, debit card or Social Security information was affected, and no customers experienced a financial loss.
In June 2021, FINRA announced that it had 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.
In Jan. 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. The brokerage has since beefed up its capital holdings, compliance and risk management procedures and customer support team in an effort to make sure these extraordinary restrictions aren't necessary in the future.
In Dec. 2020, Robinhood was charged by the SEC 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 Dec. 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 stated 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 Aug. 2020, Robinhood announced plans to hire hundreds of new customer support representatives.
» Learn more about alternatives to Robinhood
Is Robinhood right for you?
If a streamlined trading platform and mobile experience, an IRA with a contribution match or the ability to trade cryptocurrency are important to you, Robinhood is a solid choice. It doesn't offer quite as wide of an investment selection as some of its competitors — it's missing individual bonds and mutual funds — but for casual investors who are looking for an easy-to-use, low-cost broker, it'll do the trick.
on Robinhood's website
Frequently asked questions
Robinhood is a good fit for beginner investors, and the company made our list of the best brokers for beginners. The app offers a streamlined, approachable and easy-to-navigate trading platform, plus extremely low costs, which beginner investors tend to prioritize. Robinhood is designed to provide easy access to the stock and crypto markets.
The main downside of Robinhood is that the investment selection is limited for hands-off, passive investors: The broker offers no mutual funds or index funds, which financial advisors typically suggest using as the basis of a diversified portfolio. Customer service availability and support also aren't as robust at Robinhood as they are at other, more mainstream brokers.
However, Robinhood does offer exchange-traded funds, which function similarly to mutual funds in that they allow you to gain exposure to a number of different companies by making a single investment. (Learn more about the difference between ETFs and mutual funds.)
Things like fees and expenses can quickly eat into your investment returns, and those are low at Robinhood, which is a benefit of using the service. But whether your investment grows or incurs losses depends heavily on the investment itself — and economic factors, like the stock market's overall performance — rather than the brokerage firm where you choose to hold those investments.