Is Robinhood Safe?
Robinhood is a brokerage firm that doesn't need much explanation. As one of the first brokers to offer zero-commission trading, Robinhood ushered in a new wave of investors who value ease of access over the complicated (and expensive) systems used by older brokerage firms.
So far, Robinhood has opened millions of new accounts. Even with all this popularity, some people still question if Robinhood is a scam.
Can Robinhood be trusted in 2025? Let’s examine.
Is Robinhood Legitimate?
Oversight bodies are key to making sure brokers stick to fair business practices. Checking a broker’s registration and licenses from these agencies is a solid first move when deciding if it’s safe for your investments.
FINRA (the Financial Industry Regulatory Authority) and the SEC (the Securities and Exchange Commission) are the main regulators in this area. Robinhood is overseen by both, and to keep its licenses, Robinhood must follow all the rules these agencies set.
There are many rules, but in short, these regulations aim to keep brokers transparent and protect customers.
Is Robinhood Insured?
Beyond licensing, the insurance a broker provides can bring added reassurance. SIPC and FDIC are popular broker safeguards, and a broker must meet certain standards to offer them.
Robinhood includes SIPC and FDIC coverage for every account.
SIPC insurance is a standard requirement (which is why all U.S. brokers have it), but Robinhood offers an extra layer of optional protection.
Basic SIPC covers up to $500,000 for securities, with half of that for cash. The extra layer, called excess of SIPC, works the same way but with much larger coverage. It can cover up to $10 million in securities and $1.5 million in cash.
SIPC shields investors from losses tied to a broker's failure. If Robinhood were to go under, your account would still be covered.
Robinhood also provides FDIC insurance for Spending accounts, with funds swept into partner banks for coverage up to $1.25 million.
Robinhood Promotion
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Is Robinhood Secured?
A broker’s guarantees, technology, and security methods all matter when measuring its quality.
Robinhood’s policy refunds any lost money caused by unauthorized use. If your account is hacked, Robinhood will compensate you, as long as you show that you didn't authorize the transactions.
Robinhood also runs a secure platform. You can count on advanced AES encryption and Two-Factor Authentication to help keep your account safe.
Accounts and Tradable Products
Robinhood allows you to trade in stocks, options, ETFs, real estate trusts, and American Depository Receipts. It also provides futures and cryptocurrencies like Bitcoin, Ethereum, Chainlink, Pepe, and Aave. However, it does not include mutual funds, bonds, or foreign exchanges.
Cryptocurrencies, futures, and stocks must be held in separate accounts. Stocks can be placed in taxable or
retirement accounts, but cryptos are limited to taxable accounts.
You can trade stocks on margin or with cash at Robinhood. All crypto accounts use cash. Only stock positions have SIPC insurance.
Every Robinhood trading account is a brokerage account. They do not offer managed accounts.
Cash Features
Robinhood has spending accounts in addition to brokerage accounts. These spending accounts do not
allow trading and automatically transfer your money to Chase Bank, where it is covered by the FDIC instead of
SIPC.
The spending account comes with a cash card that has features such as MoneySend with other Mastercards, shopping
bonuses at certain stores, and rounding up purchases to buy small portions of stocks or cryptocurrencies.
The cash card has a daily ATM limit of $510, and it does not work in many countries like Argentina, the UAE, and Latvia.
For more payment options, Robinhood has the Gold Card. This Visa Signature card is made of stainless
steel, works anywhere Visa is accepted, and carries no foreign transaction fees. It provides 3% cash back on all purchases and has no annual fee, but you need a Gold subscription to get it.
Financial Planning and Investment Advice
Robinhood is a broker-dealer, not an investment advisor. It does not provide financial planning.
It only has two services that offer one-time investment suggestions.
One service is for new customers who have never placed a trade. To use it, open the app, tap the head-and-shoulders icon in the bottom-right, go to the Menu by tapping the three lines in the top-left, and select Investing. Scroll down to find the first-trade recommendation link. Robinhood’s bot will ask a few questions and suggest a portfolio of ETFs.
Retirement accounts can also get portfolio suggestions, but these are single-use tips. Robinhood does not give ongoing account monitoring.
Opening an Account
You can open a brokerage or spending account on Robinhood’s
website or mobile app by clicking the get started button.
Robinhood requires a permanent U.S. address and a Social Security Number to open an account, but U.S. citizenship is not necessary. A valid visa or Green Card works. You can also open a crypto account from Europe on Robinhood’s Europe page.
During the application process, Robinhood will request a digital copy of an ID, like a passport or driver’s license.
Open Robinhood Account
1% IRA match and up to $200 FREE stock at Robinhood.
Visit Robinhood Website
Customer Service
Robinhood does not have a strong history of customer support, but it has improved. On both its website and app, there is a help section. On the website, go to Account in the main menu and select Help. A chat window will open with an AI assistant. Type “human” to speak to a real person.
The Help Center on that same page answers many typical questions for both new and experienced users.
On the mobile app, go to the Menu and tap Robinhood Support to find the same chat and Help Center links.
Robinhood has phone numbers (650-761-7789 for securities and 888-275-8523 for spending and crypto), but they do not connect to live agents. You must use the app or website for assistance.
Robinhood does not operate any physical branch locations.
Pricing Schedule
Robinhood’s cash card charges a $2.50 ATM fee for both in-network and out-of-network transactions. This is in addition to any fee that the ATM operator imposes. Robinhood will reimburse its own fee for customers with at least $300 in direct deposits every month, but not the operator’s fee.
Robinhood has $0 commissions for stock and ETF trades, although there are regulatory fees on sales. Equity options have no per-contract fees, while index options cost 50¢ per contract (Gold users get a 15¢ discount).
The Gold plan is $5 per month or $50 per year. Gold members receive advantages like a
4% interest rate on uninvested cash, quicker deposits, free Morningstar research, and a 25¢ discount on futures trades (the normal rate is 75¢ per contract).
Both Gold and regular customers are not charged recurring fees on brokerage or spending accounts. Robinhood has no account minimums.
Margin
You can establish a margin or cash account at Robinhood. Margin accounts use these interest rates:
| Margin balance | Interest rate |
|---|
| $0 to $50,000 | 5.75% |
| $50,000 up to $100,000 | 5.55% |
| $100,000 up to $1 million | 5.25% |
| $1 million up to $10 million | 5.00% |
| $10 million up to $50 million | 4.95% |
| $50+ million | 4.70% |
Gold customers can borrow the first $1,000 for free. Margin accounts at Robinhood do not permit stock shorting, Gold or not.
Research and Education
On the Robinhood Learn hub, there are articles covering topics like:
• Picking an investment: How to analyze a stock
• How to start investing with just $1
• 2025 Outlook: It’s always and never different
Stock and crypto profiles have details to guide you, such as news and current prices. Stocks have the most information. Robinhood also includes Trading Trends, showing buy and sell patterns from customers, hedge funds, and corporate insiders. Most stocks have analyst recommendations.
Computer Software
Robinhood has maintained an easy-to-use website for years. It recently introduced Legend, a browser-based platform with better charting tools than the website. Legend includes Fibonacci retracements and multiple drawing tools. Buy and sell buttons appear at the top of the charts; clicking them brings up an order ticket with the same trade types found on the website, but without recurring investments.
Both the website and Legend can be used to trade options. The website has a strategy builder for some option spreads.
Robinhood does not offer a separate desktop platform.
Mobile Apps
The Robinhood mobile app resembles the website, with the same layout and tools. Charting is not as strong because you cannot turn a chart sideways. The drawing tools from Legend are also missing. However, option traders still have solid features, like the strategy builder.
The app’s watchlists sync with the website, making it easy to view saved cryptos and stocks. On a stock’s profile, tap the bell icon in the top-right corner to set up alerts based on price or technical factors.
Additional Services
Extended Hours: Trade before the official open and after the close. Some stocks and ETFs can be traded overnight. Cryptocurrencies are nearly 24/7, and futures trade 24/5.
Fully-Paid Securities Lending Program: Earn extra money by lending out your shares.
IRAs: Only Traditional and Roth are available.
Initial Public Offerings: Type “IPO Access” on the website or the app to see upcoming stock releases.
Fractional Shares: Every stock, ETF, and crypto can be bought in whole-dollar amounts.
DRIP Service: Set up automatic reinvestment of dividends.
Verdict
Robinhood delivers inexpensive trading along with helpful banking features. It continues to grow and add new services, making it one of the most attractive brokers on the market.
Robinhood Incentive
1% IRA match and up to $200 FREE stock at Robinhood.
Visit Robinhood Website
Updated on 1/16/2025.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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