In this post we break down and explain Robinhood’s hidden fees including: Regulatory fees, trading activity fees, options fee, OCC fees and other domestic and international service fees updated as of July 22nd, 2024.
Robinhood is an app that lets you buy and sell stocks (pieces of companies) without paying money each time you make a trade. It’s like a digital shop for investing in companies, and it’s super popular because it seems free.
Even though Robinhood advertises “commission-free trading, ” which means it doesn’t charge you directly for buying or selling stocks, it still makes money from various hidden fees.
Most Robinhood fees are small but can still add up without you noticing immediately. In this guide, we’ll explain each and every fee Robinhood charges. Here is a quick summary:
TL; DR: Robinhood Hidden Fees
Spread Fees: $0.000166 per share (equity sells) and $0.00279 per contract (options sells)
When you buy or sell stocks, there’s a tiny difference between your pay and the market price. This difference is called the “spread.” Robinhood sometimes makes some money from these spreads, which is higher than other platforms.
Regulatory Fees: $8 per $1M of principal
These are small fees required by government regulators. Robinhood charges these to cover its costs. They include the Trading Activity Fee (TAF) and the SEC fee.
Gold Subscription: $50/ year
Robinhood Gold is a premium service that costs money. It offers extra features like professional research reports or more considerable instant deposits. If you choose this, it’s a clear fee, but it’s something extra you might not need right now.
Interest on Margin: 6.75%
If you borrow money from Robinhood to buy more stocks than you can afford with your own money (called “buying on margin”), they’ll charge you interest. This can add up, so it’s important to be careful if you use margin.
UPDATE: Robinhood introduced new, lower margin rates that it said are the lowest among leading brokerages. The rates vary based on the customer’s total margin balance, ranging from 5.7% to 6.75%. (May 21) press release.
Withdrawal Fees w/ instant bank: 1.75% It’s free to withdraw via standard bank transfer; however, instant bank withdrawal will cost you 1.75%. More details here.
Withdrawal Fees w/ debit card: 1.75% more details here.
Withdrawal to another broker: $100 transfer out fee more details here.
Robinhood doesn’t usually charge for withdrawing money, but if you want to transfer your stocks to another broker, they will charge a fee of $100 for that.
Standard bank transfer: No fee for withdrawals.
External debit card account: Withdrawals have up to a 1.75% fee based on the amount being transferred out. You’ll see the calculated fee when you initiate the withdrawal.
Now that you know a bit about the fees Robinhood charges, let’s explore each one and explain how it works.
Ready? Let’s roll!
Overview of Robinhood’s Fee Structure
Robinhood is known for its zero-commission trading model on stocks, ETFs, options, and cryptocurrencies, which is highly beneficial for all transaction sizes.
Commission-Free Trading
Robinhood is well-known for its commission-free trading model, which applies to stocks, ETFs, options, and cryptocurrency trading. This approach has been a significant draw for users, especially those new to investing.
This allows customers to trade without worrying about the cost per trade like those typically seen on other brokerage platforms.
Hidden and Regulatory Fees
Despite offering zero-commission trades, Robinhood DOESpass on specific regulatory fees to its users.
These include the Trading Activity Fee (TAF) and the Regulatory Transaction Fee, which are mandatory fees charged by regulatory bodies like FINRA and the SEC and are not marked up by Robinhood.
Robinhood passes this fee to their customers, except for sales of 50 shares or less. As of January 1, 2024, the TAF is $0.000166 per share (equity sells) and $0.00279 per contract (options sells).
** This fee is rounded up to the nearest penny, which will be no greater than $8.30 per trade.
Users are also subject to fees for paper statement deliveries, overnight check deliveries and outbound asset transfers. Get an uncapped 1% bonus when you transfer your brokerage account into Robinhood. Initiate a transfer by June 28th, 2024.
As of May 22, 2024, the SEC fee is $27.80 per $1 million of principal (only for sell orders), which is rounded up to the nearest penny. Robinhood doesn’t pass this fee on to you for sales with a notional value of $500 or less.
Staking Fees
Robinhood Crypto customers can now earn a 10% bonus on their net buys over their first 30 days on the platformstake their solana (SOL) holdings directly through the app in European markets.
Revenue Generation Beyond Commissions
Robinhood compensates for its zero-commission model through several other revenue streams.
Market Maker Rebates
Robinhood earns a portion of its revenue through rebates from market makers and trading venues.
This practice, known as “payment for order flow,” allows Robinhood to receive compensation for directing orders to particular market makers for execution.
Robinhood ATM Fees
When you make a withdrawal from an ATM, Robinhood charges a $2.50 fee.
However, if you have $300 or more in direct deposits over the last 34 days, Robinhood will reimburse your Robinhood ATM fees following the settlement of the ATM transaction (typically 1 to 2 business days).
Keep in mind, out-of-network ATM providers may also charge a third-party fee, and we won’t reimburse that fee.
NOTE: Your ATM transaction may be declined if you don’t have sufficient remaining funds in your spending account to cover the ATM fees, including refundable fees. For more details, review the fee schedule in the Spending Account Agreement.
In-network ATM fees
As long as you use 1 of Robinhood’s 90,000+ ATMs in the Allpoint or MoneyPass networks, you won’t pay any fees.
If you use an out-of-network ATM, the ATM provider may charge you a fee, and Robinhood may not reimburse you for that fee.
In March, 2024 — Robinhood and Arbitrum announced a collaboration that simplifies the path to Layer 2s (L2s) by giving Robinhood Wallet users access to Arbitrum swaps through decentralized exchanges — to cut down on gas fees.
Robinhood Gold
Robinhood Gold is a premium service offers additional features such as increased instant deposit limits and access to margin trading.
5% interest on your uninvested brokerage cash with cash sweep (1.5% without Gold)*
Bigger instant deposits*
Professional research from Morningstar
Level II market data from Nasdaq
Access to margin investing at 8%
Robinhood charges a monthly fee for Gold subscriptions, including additional interest on margin used above a certain threshold. As a Gold subscriber, you can get a 3% IRA match on eligible IRA contributions to your Robinhood IRA.**
Here are some of the key features and aspects of Robinhood Gold:
Enhanced Trading Capabilities: Robinhood Gold subscribers can access bigger instant deposit limits, which means they can use deposited funds instantly without waiting for the funds to settle.
Margin Trading: Robinhood Gold allows users to trade on margin, giving them access to borrowed funds to purchase stocks. This can increase both the potential gains and risks.
Additional Market Data: Subscribers get access to in-depth research and Level II market data from NASDAQ, which provides more detailed information about buy and sell orders in the market than is available through standard Robinhood accounts.
Interest on Margin: Robinhood Gold offers a competitive annual interest rate for money borrowed over $1,000. As a Gold member, you enjoy a lower rate.
Monthly Fee: The service costs $5 per month, including the first $1,000 margin. Beyond $1,000, additional interest fees apply based on the amount of margin used.
Other Benefits: Robinhood Gold members also benefit from priority customer support, which can be crucial for resolving issues quickly.
Robinhood Gold is suitable for traders who need more than the basic features offered in the free Robinhood account, especially those looking to utilize margin trading and who can benefit from faster access to deposited funds and more comprehensive financial data.
What Customers Dislike About Robinhood Fees
Hidden Charges
In March of 2024, a Reddit user noticed Gold fees would soon be raised.
NOTE: It’s important to carefully read ALL the fine print, terms of service and consider the risks associated with margin trading, as it can significantly increase potential losses. For detailed information and the most current features, it’s best to visit Robinhood’s official site or contact their support directly.
“I don’t remember Robinhood charging any fees last year on options today I placed my option order and it has a 0.03 regulatory fee per contract. Not sure when this change was implemented but I am very disappointed in robinsbood for charging a commission, I thought they were commission free.”
Interest is earned on eligible uninvested cash swept from your individual investment account to program banks. Program banks pay interest on your swept cash minus any fees paid to Robinhood.
The Annual Percentage Yield (APY)* — 1.5% as of August 11, 2022, or 5% for Robinhood Gold members as of November 15, 2023.
Margin Fees
For users who choose to trade on margin (borrowing money to trade), Robinhood charges an interest rate on the borrowed funds. This rate varies depending on whether the user is a Robinhood Gold member.
Gold members typically receive a lower rate than non-Gold members.
Through this multifaceted approach to revenue generation, Robinhood maintains a low-cost trading environment for its users while still operating profitably.
NOTE: On May 6th, 2024, the U.S. Securities and Exchange Commission (SEC) issued Robinhood a 'Wells Notice, ' indicating that the SEC is seriously considering legal action against the retail crypto exchange.
Swan primarily targets users interested in purchasing Bitcoin regularly through a 'recurring buys' model. Fees are directly related to the amount and frequency of purchases.
Swan Bitcoin’s model makes it an especially appealing option for recurring low-time preference investors. Swan combines low fees with additional savings for frequent purchases and successful referrals.
Trading Fees
Right now, Swan customer have ZERO fees for their first or next $10,000 in Bitcoin purchases.
Swan Bitcoin has low commissions (0.99%) for all purchases and sales whether made instantly, via wire transfer, direct deposit, or as part of a recurring transfer plan. Depending on your purchasing size, your fees can be up to 80% cheaper at Swan than if you buy Bitcoin through another platform.
Referral Incentive Program (Receive a $10 Bitcoin Bonus)
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We’ve set up a dedicated referral dashboard for you to keep track of your referrals and earnings.
Comparing Transaction Fees: Swan Bitcoin vs. Robinhood Fees
When comparing fee structures, it’s essential to understand how each platform charges for transactions and how these fees impact both small and large transactions.
For small transactions: The absence of commission fees makes Robinhood an attractive option for small transactions.
Small traders benefit from not paying a flat fee per trade, which can disproportionately affect smaller trade amounts.
However, they still face small regulatory fees like the 'Trading Activity Fee, ' which is $0.000166 per share for equity sales.
As of January 1, 2024, the TAF is $0.000166 per share (equity sells) and $0.00279 per contract (options sells) on Robinhood. This fee is rounded up to the nearest penny, which will be no greater than $8.30 per trade. Keep in mind, you may be charged more than the $8.30 fee because the fee limit is based on the execution of your order, which can occur with multiple trades.
For large transactions: While the lack of trading fees benefits larger transactions, Robinhood users must consider the impact of regulatory fees, which can accumulate based on the transaction size.
However, these fees are relatively minor compared to typical commission charges on other platforms.
Membership and Subscription Fees
When considering the membership and subscription fees between Swan and Robinhood, each platform offers different approaches catering to specific investors and services.
Swan Bitcoin Membership Fees: Swan Bitcoin focuses primarily on Bitcoin and does not charge general membership or account fees.
Robinhood Membership Fees: Robinhood offers a more traditional membership model through its Gold service.
Robinhood Gold costs $5 per month and includes additional perks like earning higher interest on uninvested cash. This service provides value to more active traders or those looking for deeper financial insights and quicker access to funds.
Both Swan and Robinhood have distinct fee structures beyond basic trading fees, including withdrawal, inactivity, and transfer fees. Understanding these can help users gauge the overall cost of using each platform.
Robinhood Fees
Withdrawal Fee: Robinhood does not charge fees for ACH withdrawals but has wire transfer fees. Domestic wires are free, but international wire fees must be checked for hidden forex charges.
Inactivity Fee: $0 No fee for inactivity. Replacement card $0 No fee for replacement card. Your funds will be held at or transferred to JP Morgan Chase Bank, N.A. an FDIC-insured institution.
Transfer Fee: Robinhood charges a $75 fee for outbound transfers (ACATS), a significant cost if a user moves their portfolio to another brokerage. However, depositing funds via ACH and withdrawing funds from a bank accountis free.
Swan Bitcoin Fees
ZERO Fees: No fees on your first $10k! Enjoy zero fees on your first $10,000 of Bitcoin buys (or your next $10,000 for existing clients). No time limit, applies to single buys, recurring buys, and IRA buys. Learn more.
Withdrawal Fee: Swan Bitcoin does NOT charge any fees for withdrawing Bitcoin to an external wallet, which is a significant benefit for users looking to move their Bitcoin to personal wallets or other exchanges.
No Inactivity Fee: Swan promotes regular purchasing but does NOT penalize users with inactivity fees, making it cost-effective for long-term holding without regular transactions.
Transfer Fee: There are NO fees for transferring funds in fiat.
Which Platform is More Cost-Effective for Different Types of Investors
Robinhood
Robinhood offers a broad approach to cryptocurrency trading with no commission fees, which might suit those looking to trade various cryptocurrencies without incurring high costs.
However, the depth of features specific to cryptocurrency trading might not be as robust as dedicated competitor crypto platforms.
Swan Bitcoin
Swan is more cost-effective for those focused explicitly on frequent Bitcoin smash buys and those planning regular and substantial purchases.
Remember: Swan is Bitcoin-only.
Now, you are ready to take control of your Bitcoin and crypto investments with competitive fees! Don’t settle for fake Bitcoin with Robinhood. Start securing your financial future with Swan with the hardest money ever known to man.
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Drew
Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin.
He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles.
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