Robinhood Review 2023: Pros, Cons and How It Compares - NerdWallet (2024)

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 (although options are not currently available in Robinhood's IRAs).

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. Cryptocurrency is also not available in Robinhood's IRAs.

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.

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.

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%.

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.)

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.

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.

Robinhood Gold

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.

Reliability and trustworthiness

Robinhood has been the subject of serious complaints and lawsuits over the years, which potential users shouldn’t ignore:

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.