If you're considering opening an investment account with Robinhood, it's important to understand the fees associated with their services.
While Robinhood offers commission-free trades and no account maintenance fees, there are other charges that you need to know about.
One of the fees that Robinhood passes on to its customers is the Regulatory Transaction Fee.
This fee is charged by the Financial Industry Regulatory Authority (FINRA) and is used to cover the costs of supervising and regulating the securities markets and securities professionals.
The fee is only charged on sell orders and is currently $8 per $1,000,000 of principal, rounded up to the nearest penny.
However, Robinhood doesn't pass this fee on to sales with a notional value of $500 or less.
The Trading Activity Fee is another fee that Robinhood passes on to its customers.
This fee is charged by FINRA to recover the costs of supervising and regulating brokerage firms like Robinhood.
The fee is charged on equity sells at a rate of $0.000145 per share and on options sells at a rate of $0.00244 per contract.
This fee is also rounded up to the nearest penny, with a limit of $7.27 per trade.
Keep in mind that you may be charged more than the $7.27 fee if your order is executed with multiple trades.
If you trade American Depositary Receipts (ADRs) on U.S. stock markets, you may be charged a fee by the banks issuing these certificates.
The custodial fees typically range from $0.01 to $0.03 per share.
Robinhood aims to cut all fees as much as possible, and this includes the fees associated with Cash Management.
You won't be charged any maintenance fees for opening, closing, or maintaining a bank account. You also won't be charged in-network ATM fees as long as you use one of the 75,000+ ATMs in the Allpoint or MoneyPass networks.
However, if you use an out-of-network ATM, the ATM provider may charge you a fee, which Robinhood Financial won't reimburse you for.
There are no inactive account fees, foreign transaction fees, or transfer fees.
If you have a Gold account with margin spending enabled, you may incur interest charges if your investments or debit transactions are funded from margin.
For instance, if you spend more available cash than you have in your account with your debit card, margin will activate, and you will be charged interest on any amount you borrow over $1,000.
There is also an ongoing monthly subscription cost of $5 for Robinhood Gold.
If you make a payment to a third party and the transaction is declined due to insufficient funds, the third party may charge you a fee.
It's essential to understand the fees associated with Robinhood and to check the fee schedule regularly for updates.
By doing so, you can ensure that you're fully aware of the costs of trading with Robinhood and can make informed investment decisions.
Most of the fees charged by Robinhood are passed on to another agency, such as FINRA.
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