With over 31 million users, Robinhood is a popular US stockbroker, enabling traders to access financial exchanges. It is best known for its commission-free investments and low-cost trading, making trading accessible to more people than ever before. But what should you do if you see unsettled funds in Robinhood? Should you be concerned or is this a normal part of the process?
In this article, we are going to tell you everything you need to know about unsettled funds in Robinhood, including what it means to have unsettled funds and how you can access that cash.
Robinhood Displaying Unsettled Funds – When To Worry
Robinhood is a popular platform for many traders, and it’s easy to see why. Robinhood makes trading accessible to a wide range of traders, with low-cost trading options and commission-free investments. A choice of three different account types gives ultimate flexibility in your approach, enabling the platform to appeal to all types of traders.
However, if you notice that your Robinhood account is showing unsettled funds, you might have a moment of panic. What does it mean to have unsettled funds in Robinhood, and how do you go about accessing your hard-earned cash? Read on to find out.
What Is Robinhood?
Established in California in 2015, Robinhood Markets Inc. was originally founded by Vladimir Tenev and Baiju Bhatt with the aim of making the financial markets accessible to everyone, rather than only the wealthy. Along with the headquarters in Menlo Park, California, Robinhood also has offices in Florida, Denver, Colorado and London.
Robinhood Markets is a FINRA-regulated broker-dealer, and is regulated by the SEC (Securities and Exchange Commission). This is because Robinhood is considered to be a brokerage firm that is responsible for handling financial securities.
As a result of its promise to make trading accessible to all, the Robinhood platform is available in most countries across the globe. However, this excludes Syria, Iran, Cuba, North Korea and the Crimea region of Ukraine.
Robinhood generates the majority of its revenue from the interest that it earns on customers’ cash balances and lending. This is how Robinhood manages to operate on a fee-free basis, keeping the costs associated with trading as low as possible for its customers.
This platform is ideal for part-time traders and those who are new to trading, thanks to its simple design and accessibility. It allows you to invest and trade small amounts, without being subjected to the high levels of commission and fees that you may find with some other services.
What Are Unsettled Funds On Robinhood?
It can be quite scary when you see ‘unsettled funds’ in your Robinhood account for the first time. You might be wondering why your funds are unsettled, what that really means and most importantly of all: can you use them?
Think of unsettled funds in Robinhood in the same way as you would pending transactions in your bank account, or like a cheque that hasn’t quite cleared. They are funds that are due to you which haven’t yet been cleared and are still pending.
There are two different types of transactions on Robinhood that may result in unsettled funds. These are bank deposits and stock sales. Let’s take a look at these two types of transactions and explore exactly what it means to have unsettled funds from these transactions.
Unsettled Robinhood Funds From Bank Deposits
If you find that you have unsettled funds in Robinhood that have resulted from a bank deposit, you might be wondering why your money is not yet available. In fact, you might even be concerned that there is a problem with your deposit or that your money could be at risk.
Don’t panic – it is completely normal for funds from a bank deposit to show as unsettled funds at first. It can take up to five days for money that you have transferred from your bank account to reach your Robinhood account and become available for use. This pending transaction will display as unsettled funds until it arrives safely in your Robinhood account.
Unsettled Robinhood Funds From Stock Sales
When you sell stocks on Robinhood, the pending income will be held as unsettled funds. This is because SEC (Securities and Exchange Commission) rules dictate that funds are held for a certain period of time after selling stocks before being released. As Robinhood is regulated by the SEC, it is bound by the regulations enforced by the SEC, including this waiting period.
So, if you sell stocks on Robinhood, you should expect a short wait of up to two days before the funds are released into your account. Before this time, they will show as unsettled funds. However, as soon as the funds are released, you will be able to reinvest them or withdraw the proceeds to your bank account.
How Long Does It Take For Unsettled Funds To Settle On Robinhood?
How long it takes for unsettled funds to be released on Robinhood will depend on the type of transaction that the funds have resulted from. If the unsettled funds are from a bank deposit, you could be waiting for up to five working days for the funds to settle. Alternatively, if the unsettled funds are the result of selling stocks, your funds will usually clear in around two working days.
It’s best to think of unsettled funds in Robinhood in the same way as you would pending transactions in your bank account. Just like a cheque takes a few days to clear, deposits into your Robinhood account are held for a short period of time before approval. There’s no need to worry – this is completely normal as it is simply a result of regulatory rules that Robinhood must follow.
Trading With Unsettled Funds
Unsettled funds on Robinhood can’t generally be accessed. This is because they are pending funds that have not yet cleared into your account. Most customers will need to wait until those funds have arrived in their account before they are able to use them for trading.
However, certain customers may be able to trade with their unsettled funds, up to a specified limit. This allows customers with certain account types to use their unsettled funds from the sale of stock or a bank deposit to purchase further stocks.
If you’re on a Robinhood Cash account, you will not be able to use your unsettled funds for trading. This is because Robinhood Cash accounts do not have access to Instant Deposits or Instant Settlement.
It’s better news for Robinhood Instant and Gold account holders, as they are able to use unsettled funds to make new trades, up to a certain limit. This limit depends on the type of account that they hold.
For Robinhood Instant account holders, you will be able to trade with up to $1,000 of unsettled funds, without the need to wait for the funds to clear. This provides extra flexibility if you just can’t wait for those funds to go through.
If you hold a Robinhood Gold account, you’ll be able to access over $1,000 from your unsettled funds. The exact amount of unsettled funds that you’ll be able to access will depend on your tier amount, but you’ve got the benefit of being able to access more of your unsettled funds so that you can continue trading without a break.
Why Cant I Pull My Money Out Of Robinhood?
If you find that you are unable to withdraw your money from Robinhood, you may be concerned that your money is at risk. The most common scenario is the fact that your money is classified as “unsettled funds”, but there are other explanations, as well. Don’t panic – there are a few different reasons why you might not be able to withdraw your money from Robinhood. Let’s take a look at some of those reasons.
The most common reason for not being able to withdraw funds from Robinhood is that the funds are not yet settled. After each sale or bank deposit, the money coming into your account needs time to settle before you can access it. This is similar to a cheque being paid into your bank account that needs time to clear before the funds are accessible. The unsettled funds are essentially a pending transaction that is yet to clear.
Withdrawal Limited Exceeded
Robinhood permits five withdrawals from your account per business day. In addition to this, traders are only able to withdraw a maximum of $50,000 per business day across all withdrawals. If you attempt to exceed these limits, the withdrawal will be denied. There is no need to panic if this happens – simply wait until the next business day and Robinhood should allow you to withdraw your funds. Don’t worry if the day comes and you’re still unable to withdraw money – in some instances, Robinhood unlocks the withdrawal functions only 24 hours after the maximum withdrawal amount was reached.
Finally, there may be restrictions on your account that are preventing you from withdrawing funds. This is a rare occurrence, but it can happen if you change your linked bank account or display unusual behaviour such as suspicious trading patterns. If you suspect that you may have had restrictions placed upon your Robinhood account, you’ll need to contact Robinhood support for advice. They will be able to talk you through your options for unlocking your account to enable you to withdraw your money.
While it may seem like a trivial explanation to a problem that has likely caused you a lot of stress and anxiety, it’s still worth looking into before you begin investigating your unsettled funds. Robinhood requires you to put in your account number manually sometimes, and if that’s your preferred withdrawal method, then you might want to check if you typed everything in correctly. In many cases, the reason for being unable to withdraw money isn’t unsettled funds, but mistyped digits in your bank account number.
What To Do If You Can’t Withdraw Money From Robinhood
If you find that you are unable to withdraw money from your Robinhood account, the first thing to do is to check whether your funds are showing as ‘unsettled funds’. If this is the case, you will need to wait until the funds settle before you can withdraw them. This can take up to five working days, depending on where the said unsettled funds came from.
For funds that are not showing as unsettled, you’ll then need to ensure that you haven’t already reached your withdrawal limit for the day. If you have already made five withdrawals or if the requested withdrawal would take you over your $50,000 daily withdrawal limit, you will need to wait until the next working day to withdraw your funds.
If you still can’t withdraw your money from Robinhood, it’s best to contact their support team. This platform is known for its good customer support, so you should find that they are happy to explain why you are unable to withdraw your money and to help you gain access to your funds.
Is Trading Really Free On Robinhood?
Robinhood prides itself on being free from the commission, as well as not charging any fees to open, maintain or fund your trading account. This is because Robinhood wants to be accessible to all, rather than just the wealthy. However, you’ll still find fees on sell orders, as these fees are set by the Financial Industry Regulatory Authority (FINRA). These fees are standard across every broker and platform and are unavoidable if you want to trade stocks.
Why Are Unsettled Funds Even A Thing?
It is understandable that you want to get your hard-earned money out of the app as soon as possible, but the unsettled funds Robinhood function actually has a very important purpose. The time required for your funds to settle is spent by algorithms (and in some cases, humans) to make sure that the trade was carried out correctly and that you’re able to get all of the money you’re owed accordingly with the state of the market at the time of your sale. Unsettled funds are annoying, but they are a necessary function of the Robinhood app, and part of what makes it legitimate.
Remember that if you want to have as much control over your money as possible, you can upgrade to Robinhood Gold or Instant to be able to make trades with your unsettled funds.
Can You Actually Make Money On Robinhood?
Many traders across the globe make money through trading on Robinhood. It’s a good platform for those just getting started with trading, as well as part-time traders. However, there may be more suitable platforms out there for more experienced traders or those who wish to make a full-time income from trading.
Can I Trade Cryptocurrencies On Robinhood?
Yes, cryptocurrency trading is a well-known, popular function of Robinhood. After depositing your funds in the application, you can start buying and selling digital currencies right away. The app is a good way for complete rookies to get into the crypto sphere, especially because of its low barrier of entry and low minimums on buying these currencies. When you use Robinhood, you can buy crypto with as little as five dollars!
One important thing to remember is that while Robinhood allows for the trading of cryptocurrencies, storing these funds in your Robinhood account indefinitely may not be the greatest idea. This actually applies to most of the popular crypto trading apps, or “cryptocurrency exchanges”. When you amass a significant amount of money in cryptocurrencies, you should consider opening up a so-called “hard wallet” for a safer, more reliable way to store your wealth.
Just like pending transactions in your bank account, unsettled funds in Robinhood are simply funds that are awaiting clearance. For bank deposits, it can take up to five working days for the funds to show as available in your account, whilst funds from the sale of stocks should be available within two working days.
If you have an Instant or Gold account with Robinhood, you may be able to buy stocks with your unsettled funds. However, there may be limits on how much of your unsettled funds you can use depending on your tier amount, so you’ll need to check this first. Keep in mind that unsettled funds showing up in your account don’t mean that your money has gotten into the wrong hands – it’s a necessary feature of the Robinhood app.
The inability to withdraw isn’t always caused by unsettled funds. Withdrawing funds from your Robinhood account is usually straightforward, but if you’re unable to withdraw your funds, you’ll need to check that your funds are showing as available and that you haven’t already reached your daily withdrawal limit. If this is the case, you should contact Robinhood support for further advice on how to withdraw your funds.