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Robinhood Cash Sweep Options. Robinhood Money Market Fund, Brokerage Account Interest Rates.


2019 Robinhood uninvested cash sweep account options (FDIC bank, money market fund) vehicle choice. Robinhood brokerage\IRA account interest rates, insurance, and fees.



Robinhood Cash Sweep Account Options


Money that is deposited in a Robinhood securities account is protected by SIPC, the major insurer for the U.S. brokerage industry, up to $250,000. The broker no longer offers an FDIC-sweep program, so FDIC insurance is not an option here. Because the company does not offer trading in mutual funds either, a money market fund cannot be used as a core account position.


Robinhood Cash Sweep Rate


The broker pays 0.00% on free cash balances. While Robinhood charges an amazing $0 for stock and ETF trades, the broker does make money by earning interest on the cash balances in its customers’ accounts.


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Moving Money To Robinhood Account


Moving money to Robinhood is easy using the broker’s mobile app. A maximum of $50,000 can be deposited into a brokerage account per business day. The first $1,000 deposited is available for immediate trading. The settlement time for deposits above that amount is between 4 and 5 business days.

If an ACH is reversed, it is considered a canceled transfer of funds. Reasons could include a duplicate transaction, a declined transfer, or insufficient funds. Whatever the reason, Robinhood will charge a $30 fee. The charge is actually imposed by Robinhood’s clearing partner, Apex, so the broker isn’t able to waive the fee under any circumstances.

Linking an external bank account is easy using the Robinhood mobile app. Just tap on the menu icon in the upper-left corner. Next, choose ‘Banking,’ and then tap on ‘Linked Accounts.’ Finally select ‘Add New Account.’ Here you will see a long list of bank logos. Available banks include Chase, Wells Fargo, PNC, Bank of America, USAA, and Charles Schwab. If you don’t see your bank, you can manually add a routing number, and the app will then add it.

Once you have an external account linked to your Robinhood account, you can transfer funds between the two. The broker’s mobile app has a feature where you can set up automatic deposits.


Robinhood Compared To Other Brokers


Compared to other brokerage firms, Robinhood’s cash sweep options aren’t very attractive. E*Trade clients, for example, can use a variety of money market mutual funds or an FDIC-sweep program for an account’s core position. These are in addition to the SIPC option, which pays 0.01%. The money market funds yield between 0.02% and 0.84%. Only managed accounts are eligible for the highest rate. The broker’s FDIC program uses up to 5 program banks per account holder, which produces an effective insurance limit of $1,250,000, five times what Robinhood’s SIPC insurance delivers.

Checks and a debit card are not available at Robinhood. This is another failure compared to what other brokers currently offer. Merrill Edge traders, for instance, can have checks and a Visa debit card attached to a trading account free of charge. Fidelity customers receive ATM fee rebates when using the broker’s debit card inside the U.S., while Schwab goes one step further by reimbursing all cash machine surcharges worldwide.


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With respect to its competitors, the Robinhood’s pricing, aligned with its business strategy, has been the driving force in the business’ growth. Unless its competitors adopt the same business model offering $0 price point, Robinhood has the opportunity to attract their customers and recruit new ones who aren’t able to afford the traditional brokerage fees.

This is where critics come to the equation, stating that giving inexperienced investors, in this case the millennials and post-millennials, the ability to buy and sell-hence the ability to influence the business world and businesses’ valuations, could be a ‘bad’ idea. New York Times columnist Farhad Manjoo tweeted: "Why’s this a good idea? People shouldn’t buy individual stocks. Why make it easy cheap mobile?"