Robinhood Review 2024: Pros, Cons and How It Compares
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Our Take
4.3
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.
High interest rate on uninvested cash.
Cons
No mutual funds.
Limited customer support.
Compare to Similar Brokers
Current Product
NerdWallet rating 4.3 /5 | NerdWallet rating 4.9 /5 | NerdWallet rating 4.6 /5 |
Fees $0 per trade | Fees $0 per online equity trade | Fees $0 |
Account minimum $0 | Account minimum $0 | Account minimum $0 |
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Full Review
Where Robinhood shines
IRAs with 1% match: Robinhood launched individual retirement accounts (IRAs) in December of 2022. One thing that sets Robinhood IRAs apart from others is the 1% match on contributions. That feature is 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 is still one of the few brokers that lets you trade cryptocurrencies for free, so among stock brokerages, it’s a standout feature. However, if you compare Robinhood’s crypto offerings with pure-play crypto brokerages, that shine starts to fade.
24/5 stock trading: Robinhood's 24 Hour Market feature began rolling out to customers in late May 2023. It 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. IPO access is not available in IRAs, however.
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 customer support: Robinhood has made noticeable improvements to its customer service, but it’s still not on par with other brokerages.
Reliability: Robinhood has previously 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 and IRAs.
Margin accounts.
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, inactivity or ACH transfer fees. $100 ACAT outgoing transfer fee. (Robinhood Gold costs $5 a month.). Matching funds in IRAs may be taken back if money is withdrawn after less than five years. |
Interest rate on uninvested cash | 1.5% for free accounts, 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 rated. |
Trading platform | Robinhood's mobile and web platforms are known for their smooth sign-up, funding and trading processes. However, the constant pop-up notifications can be exhausting. |
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. |
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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: 1.5 out of 5 stars
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 IRA withdrawals, beyond the IRS's penalties: 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 that you withdrew.
Robinhood Gold, the broker's premium account tier, costs $5 per month.
Interest rate on uninvested cash: 4 out of 5 stars
Robinhood's free accounts pay investors an annual interest rate of 1.5% on uninvested cash — which, although not astronomical, is still higher than the default interest rate at many other brokers. However, Gold accounts earn 5% per year or uninvested cash — hence Robinhood's high rating for this category.
Number of no-transaction-fee mutual funds: Not rated.
Robinhood does not offer any mutual funds.
Tradable securities: 3 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. It also offers exchange-traded funds, including index and bond ETFs.
Like some other brokers, including Interactive Brokers, Fidelity 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.
Robinhood's taxable brokerage accounts allow margin trading, although its IRAs do not. Free accounts charge margin rates of 6.5% plus the upper bound of the federal funds rate target range, while Gold accounts charge 2.5% plus the upper bound. At the time of writing, the upper bound of the federal funds rate is 5.5%, so Robinhood's free accounts charge 12% for margin loans and Gold accounts charge 8%. These are lower rates than many other brokers charge, although they're not quite the lowest.
Number of no-transaction-fee mutual funds: Not rated.
Robinhood does not offer any mutual funds.
Trading platform: 3.5 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.
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.
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.
Robinhood's trading platform gets relatively high marks for its advanced charting features, which allow customers to view technical indicators like moving averages. It also allows investors access to OTC stocks and IPOs (although IPOs are not available in IRAs), and allows trades any time between 8 p.m. Eastern time Sunday and 8 p.m. Friday.
However, the app serves users a somewhat-overwhelming number of pop-up notifications, which can be distracting when you're trying to do research or trade. It also loses marks in this 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 96.9%.
The average execution quality of all brokers we review was 97.4% as of Aug. 31, 2023. That means 97.4% 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.
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: 2 out of 5 stars
Robinhood's research offerings still pale in comparison to other brokers, although the company has made some efforts to increase the tools and research available for customers. It offers some basic research features such as analyst ratings and lists of top movers. Robinhood also 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.
Gold members have access to a slightly wider range of research offerings, including reports from Morningstar and Level II market data from Nasdaq TotalView.
Customer support options: 4 out of 5 stars
Robinhood's customer support features include 24/7 in-app chat, and extended-hours phone support available from 7 a.m. Eastern time to 9 p.m.
Robinhood IRAs and Crypto
Robinhood IRAs
Robinhood made IRAs available to all customers in January 2023. The IRAs come with several features that are unusual for non-employer-sponsored retirement accounts, including a 1% match on contributions (subject to a take-back provision if funds are withdrawn after 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
Robinhood IRA
4.3
NerdWallet ratingon Robinhood's website
$0
$0
1% match
on eligible contributions up to IRA contribution limits.
Robinhood Crypto
Unlike many traditional brokerages, Robinhood users can buy certain cryptocurrencies right in their taxable brokerage account. What's more, it's completely free. Pure-play crypto brokerages generally charge comparatively high fees for a similar service.
Robinhood’s cryptocurrency trading is available in almost every U.S. state (Nevada and Hawaii are the exceptions), and you can begin trading with as little as $1. Crypto-crypto trading pairs are not available, nor is staking.
The list of available cryptocurrencies is much smaller than you'll find at a true crypto brokerage, and Robinhood only offers crypto trading in taxable brokerage accounts — not in IRAs. The company is currently rolling out a noncustodial crypto wallet which lets customers access the decentralized web.
Compared with other stock brokers, Robinhood's crypto offering stands out — in fact, in our analysis it earns the highest marks of any traditional, non-crypto-pure-play broker for its crypto offering.
on Robinhood's website
on Robinhood's website
$0
per trade
$0
None
no promotion available at this time
Other Robinhood details you should know
Spending account
Robinhood also offers a spending account that comes with a debit card and $250,000 in FDIC 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 2 days early. It also offers an opt-in feature whereby users can 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.
Is Robinhood Gold worth it?
Compared with Robinhood's free account tier, Robinhood Gold pays investors higher rates on uninvested cash, and charges lower rates on margin loans. 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.)
Robinhood Gold members also get 5% 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.
The brokerage also offers Gold customers up to $1.5 million in deposit insurance through a network of partner banks. That's significantly more than the $250,000 FDIC limit on most accounts.
It's worth asking yourself if you really need those features, when deciding whether or not Robinhood Gold is worth it for you. For example, if you have less than $1,200 in uninvested cash, the $5-per-month subscription cost of Gold will be greater than the interest you'll earn as a Gold user.
Is Robinhood safe?
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.
On June 30, 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 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.
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.
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.
» 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. But now that plenty of online brokers have joined Robinhood in eliminating commissions, 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.
How do we review brokers?
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgments on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars).
For more details about the categories considered when rating brokers and our process, read our full methodology.
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.