Robinhood is a financial services company that offers investment tools and services to its users.
One of the services provided by the company is a brokerage cash sweep program that enables users to earn interest on their uninvested cash that is swept to banks in the Robinhood network.
This article will answer some common questions about the current APY for Robinhood, including how to sign up, how you can earn interest, how a rate change can affect your interest, and other pertinent information.
Users do not earn interest directly from Robinhood.
Instead, the company sweeps their uninvested cash into its network of FDIC insured program banks that hold and invest their money.
This enables users to earn interest on their uninvested brokerage cash swept to the banks in the network.
Users can find their swept cash balance under “Brokerage cash sweep program” in the Investing section of Settings in the app.
The swept cash balance is any available cash that users have in their brokerage account that they have not yet invested or spent.
Customers with a margin debit balance would not earn interest through the cash sweep program because a cash balance is needed.
Additionally, if a user has been flagged as a pattern day trader (PDT), they can still sign up for the brokerage cash sweep program, but they won't be eligible to earn interest until their PDT flag is removed.
There is no minimum or maximum amount that users can earn interest on.
Users will start earning interest on their first cent swept. However, cash deposited to these banks will only be covered by FDIC insurance up to a total maximum of $1.5 million, up to $250,000 per program bank, inclusive of deposits they may already hold at the bank in the same ownership capacity.
Interest is accrued daily based on the end of day balance at the program banks. The balance is multiplied by the daily interest rate.
Users are paid interest by the program banks monthly, and they can keep track of how much interest they’ve earned in the Investing section of Settings in the app.
To sign up for the brokerage cash sweep program, follow these steps:
The APY is subject to change and is affected by the Federal Reserve Bank and market conditions.
The Fed uses various tools to meet its goals, and interest-rate changes often get the most attention because they directly impact how much interest users can earn and how much it costs to borrow.
A rate change of 1% means that for every $1,000 held at the program banks for a year, users would earn a difference of $10 in annual interest.
In conclusion, the brokerage cash sweep program offered by Robinhood is a way for users to earn interest on their uninvested cash.
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