Robinhood Review and Comparison
Robinhood is a popular brokerage app that offers trading for assets such as popular cryptocurrencies, stocks, and ETFs. In this review, I’ll cover the main things you need to know before signing up.
Robinhood Review Summary
Robinhood facilitates the buying, holding, and selling of several asset types, including crypto and stocks. Although having an all-in-one investment platform is handy, Robinhood is notorious for poor customer service and withdrawal issues. Despite being commission-free, you’ll also want to keep an eye on spreads.
That’s Robinhood in a nutshell. If you want a detailed review of Robinhood, keep on reading. Here’s what I’ll cover:
- Robinhood Overview
- Robinhood Services
- Currencies and Payment Methods
- Robinhood Fees
- Robinhood Limits
- Supported Countries
- Customer Support and Reviews
- Frequently Asked Questions (FAQs)
- Conclusion – Is Robinhood Safe to Use?
1. Robinhood Overview
Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt – both of whom had experience building high-frequency trading platforms.
As implied by the name, the platform aspires to provide the average person with access to financial markets rather than just the wealthy.
Robinhood introduced its mobile trading app in March 2015 and has since become one of the most popular brokerages in the US. It is a FINRA-regulated broker-dealer registered with the U.S. Securities and Exchange Commission and a Securities Investor Protection Corporation member.
Robinhood went public via an IPO in 2021 and was then valued at $32 billion. The company is headquartered in Menlo Park, California, USA.
2. Robinhood Services
Cryptocurrency
Robinhood provides users with the ability to buy, hold, and sell popular cryptocurrencies while also claiming to have the lowest average cost for major trading platforms – including crypto-specific exchanges.
The platform has advanced charting tools along several different order types including market, limit, stop-market, and stop-limit orders. For those who prefer a dollar cost averaging (DCA) approach, Robinhood has a recurring buy feature, which enables users to purchase crypto on a fixed and automated schedule.
Users can also set up price alerts to keep their finger on the pulse of their favorite assets and investments.
To top it off, Robinhood also says it stores most of its customers’ crypto holdings in cold storage to boost security.
Users are free to deposit and withdraw crypto between Robinhood and external wallets, which is surprisingly not always possible on platforms that aren’t crypto-specific.
Robinhood Wallet
The company also provides a non-custodial web3 wallet called Robinhood Wallet, which is separate from the Robinhood investing app.
Robhinhood Wallet allows users to store and manage their own crypto private keys as an alternative to leaving their coins on the centralized Robinhood platform.
At the time of writing, the Robinhood Wallet is only available for iOS devices. However, this may change in the future.
The wallet can be backed up to the user’s iCloud account, which is a convenient (but somewhat insecure) method for backing up your keys.
Robinhood Connect
Robinhood Connect is an easy way to buy crypto, which is directly transferred to a self-custody wallet. You can make fast purchases using your debit card, bank account, or Robinhood account.
Stocks, ETFs, & Options
As you likely know, Robinhood also allows people to trade stocks, exchange-traded funds (ETFs), and options contracts – 24 hours, 5 days a week.
Traders can also get access to leverage via the margin function, enabling them to increase their buying power at a 12% interest rate.
Robinhood Retirement IRA
Robinhood provides a retirement fund feature, which will match your deposits with an extra 1% for every dollar you deposit.
Portfolio Builder
The platform will provide you with a one-time custom-recommended portfolio, commission-free. You also have the option of building your own portfolio or combining the recommended portfolio and your own.
Robinhood Cash Card
Robinhood also offers a debit card that provides cash back at participating brands, designed to “turn purchases into stocks and crypto.”
The Robinhood Cash Card has no monthly or overdraft fees, no minimum balance requirement, and provides up to $250,000 of FDIC insurance.
Users can also automatically invest part of every paycheck into their choice of stocks and crypto if desired.
Tax Reporting
As a cool bonus, Robinhood provides all of its users with tax documents during tax season, making it easier to file tax returns for the year.
Premium Membership – Robinhood Gold
Robinhood Gold is a premium membership that allows the holder to earn 5% APY on their uninvested cash and increase their instant deposit limits to up to $50,000.
The membership also lowers the interest rate for margin investing from 12% to 8%.
Additionally, Robinhood Gold members will receive advanced Level II market data from Nasdaq and professional research by financial analysts at Morningstar.
3. Currencies and Payment Methods
Fiat Currency
When it comes to funding your Robinhood account with fiat currency, users have a few options:
- Standard bank deposits – can take up to 5 business days to complete.
- Debit card transfers – can take as little as 30 minutes, depending on your bank.
- Instant bank transfer – deposit money from your bank in minutes instead of days.
- SEPA (EU only) – usually available within 2 business days or instantly with SEPA Instant Credit.
Cryptocurrency
Robinhood has a limited number of cryptocurrencies to trade, deposit, and withdraw on the exchange, subject to the local regulations in the user’s state.
Some of the available assets include:
- Bitcoin (BTC)
- Ethereum (ETH)
- Doge (DOGE)
- Shiba Inu (SHIB)
- Avalanche (AVAX)
- Litecoin (LTC)
- Uniswap (UNI)
- Ethereum Classic (ETC)
- Chainlink (LINK)
- Stellar (XLM)
Users must verify their identity and enable two-factor authentication to their accounts before depositing any currency, including crypto. The identity review process may take up to 5 business days.
4. Robinhood Fees
Trading fees
Robinhood claims to be commission-free for trading. However, you should be aware of the spreads involved for each trade, i.e., the “actual” price at which your order is being filled.
There are small regulatory fees that are baked into the order costs. However, these usually equate to just fractions of a cent.
The Robinhood Connect service charges 1.5% on purchases made with a debit card or bank transfer (your coins are sent directly to an external wallet), but this is a special type of instant purchase order.
Withdrawals
Instant fiat withdrawals from Robinhood to a debit card or bank account incur a 1.5% fee.
When it comes to crypto, the platform does not charge any fees for withdrawing coins. However, as with any on-chain transaction, the user will have to pay any necessary network fees charged by the blockchain(s) involved.
Although it does not apply to individual cryptocurrencies, it is worth mentioning that there is a fee of $100 to transfer your assets out of your Robinhood brokerage to an account with another brokerage.
Here are some helpful links with summaries on Robinhood Crypto fees and fees on the wider Robinhood platform.
5. Robinhood Limits
Deposits & Withdrawals
For Robinhood US users, daily withdrawal limits may vary. These will reset each day at 7 PM Eastern time for ACH transfers and each day at 12 AM Eastern time for debit card and instant bank withdrawals.
For users in the EU, SEPA deposits are limited to a maximum of €250,000 every business day with a 2 business day wait time, or up to €100,000 every day instantly with SEPA Instant Credit. SEPA withdrawals are limited to €100,000 every business day, usually available within 2 business days or instantly with SEPA Instant Credit.
UK users are limited to a maximum deposit of £100,000 for a transaction, with a maximum of 1 pending deposit at a time and 5 deposit attempts per day. There is a £0.01 minimum transfer amount for each transaction.
Position limits
The maximum amount of crypto that you can buy and hold using Robinhood Crypto for Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) is a maximum cost basis of $16,000,000 per crypto.
The position limit for Bitcoin Cash (BCH), Litecoin (LTC), & Ethereum Classic (ETC) is a maximum cost basis of $5,000,000 per crypto.
Of course, the value of your crypto on Robinhood may exceed your position limits based on market fluctuations affecting crypto prices.
6. Supported Countries
Currently, Robinhood Crypto is only available to the US (except for Hawaii) and the EU, with support for UK customers planned for early 2024.
7. Customer Support and Reviews
Like most platforms, Robinhood has a handy FAQ section, which will answer most basic questions that people have. Unfortunately, however, that’s where their useful customer service experience appears to end.
If you look hard enough, you can find a link to contact Robinhood support, which will require you to sign in to receive assistance. After examining a huge amount of online reviews, however, this help seems to have extreme wait times, poor assistance and often no resolution.
That brings us to Robinhood’s score on Trustpilot, which is one of the worst we’ve ever seen. The platform has a “Bad” rating of just 1.3 stars out of 5, with a very significant total number of reviews.
These bad reviews appear to mostly be based on a poor (or outright absent) customer service experience, time and time again failing to assist users in solving common problems on the platform.
These problems often involve withdrawals, with frustrated users often unable to withdraw their funds for weeks. It is uncertain whether or not this extends to crypto withdrawals, which may be easier to deal with.
8. Frequently Asked Questions
Yes. You can buy Bitcoin on Robinhood with a debit card or bank transfer and any fiat currency deposited into your account.
Yes, Robinhood allows users to withdraw their coins into external wallets. Users can also use the platform’s Robinhood Connect service to purchase crypto and receive it directly into a third-party wallet without ever holding funds in the centralized platform.
1. Select Crypto
2. Search for and select Bitcoin
3. Select Buy
4. Enter the amount you’d like to buy
5. Select the type and frequency of the order
6. Select Review
7. Confirm your order submission
Robinhood stores the “vast majority” of its customers’ coins in cold storage and also has crime insurance against theft and cybersecurity breaches. It is also a publicly traded company which adheres closely to regulations.
On the other hand, cryptocurrency held through Robinhood Crypto is not FDIC insured or SIPC protected. Additionally, many users have reported difficulty withdrawing funds and poor customer support.
9. Conclusion: Is Robinhood Safe to Use?
Robinhood is an extremely well-known platform that offers trading for both crypto and other asset classes.
Although the platform is highly compliant with regulations and security practices, Robinhood does appear to have some issues processing withdrawals for its users – perhaps most commonly with fiat withdrawals.
Aside from this and the aforementioned customer service issues, the platform is still well-respected and widely used.
Do you have any experience using the Robinhood trading platform? If so, I’d love to hear about it in the comments section below.
Robinhood
Pros
- Allows withdrawal of coins
- Offers stocks and ETFs, too
- Highly compliant with regulations
Cons
- Very poor online reputation
- Frequent account/withdrawal issues
- Terrible customer support
