Robinhood is a free stock trading app that allows you to trade stocks without paying commission fees.
The company was founded in 2017 and has raised $1.3 billion in funding from investors such as Andreessen Horowitz, DST Global, Ribbit Capital, GV (formerly Google Ventures), Thrive Capital, and Y Combinator.
It is a great way to invest in the stock market without having to pay high commissions or taxes. This makes investing accessible to everyone.
However, some users have complained about the lack of customer service support.
They say that they cannot get their funds back after closing their accounts.
So, how do you close a Robinhood account? Keep on reading to find out!
What Is A Robinhood Account?
A Robinhood account is an online brokerage where you can buy and sell shares of different companies at low cost.
It is basically a platform which offers its customers to invest in the stock markets.
The name Robinhood comes from the story of Maid Marian who supposedly used her skills as a thief to open several bank accounts for herself.
After robbing them, she would give half of the money to poor people. To make it legal, the robber hid these accounts under a tree called Robin Hood’s Oak.
The company started off as a simple idea: “let us put our customers first”. But now, with over 6 million customers, Robinhood is growing into more than just an investment tool.
Here are some other things you should know before signing up for Robinhood.
How Does Robinhood Work?
There are two ways to use Robinhood. You can either sign up using the mobile app or through the website.
Using the mobile app is very easy. Once you download the app on your phone, you can start by setting up your Robinhood user ID.
Then you need to set up your personal information like your email address and password. Finally, you can choose whether you want to receive alerts via text message or email.
If you don’t want to go through all those steps, you can also create a new account using the website.
On the home page, you can enter your email address and then click on the link provided.
After that, you will be redirected to a page where you can fill out your personal details.
When you finish, you will be asked if you want to receive emails from Robinhood. If not, you won’t see any emails from them.
Once you complete the registration process, you will be taken to your dashboard.
From here, you can manage your portfolio, check your transactions, and view your holdings.
You can also log into your account using Facebook or Twitter.
How To Close Your Robinhood Account
There are two ways to go about closing your Robinhood account. You can choose to deactivate your Robinhood account, which can be done through the app itself.
All that needs to be done is to tap the account icon on the screen, go down to settings and tap account information. Scroll down and tap “Deactivate Account”.
You will then be taken through a series of steps to close all your brokerage positions and withdraw your outstanding balance.
When your positions are closed and your balance is set at zero, then you will be able to confirm the deactivation.
You have the option to transfer your brokerage account to an alternative brokerage.
You will need to decide where you would like to transfer your account to, then submit a request to have your assets transferred out of Robinhood and into your new brokerage.
If all assets are transferred out, the Robinhood account will be automatically closed.
Alternatively, you can close your account by clicking on the ‘Close My Account’ button where you will be asked for your login credentials, then select logout and confirm your decision.
You will then be notified that your account is closed.
After your account is closed, you can still access all your account statements, tax certificates and trade confirmations in the app.
This is because by law, Robinhood is required to preserve records and your confidential data appropriately.
Reasons Why You Might Want to Close Your Robinhood Account
There are a few reasons people may want to close their accounts with Robinhood. As mentioned, some people choose to shift away from Robinhood because of poor customer service.
Additionally, there are a few more reasons why people decide to close their Robinhood accounts.
The first is because people would like to do more day trading. Robinhood makes trading easy and trades stocks, EFTs and options without day trading platforms and tools.
So if you are keen for more day trading, Robinhood may not be for you. Secondly, you may not like the intense risk-taking involved with Robinhood trading.
As a platform, Robinhood allows the user to make it easy to trade as an individual trader, meaning you are responsible for your own investment strategy.
You do not have the advantage of a broker to give you financial advice. A more traditional brokerage will give you a portfolio and advisor to help you make investments for you.
Lastly, a lot of people closed their accounts with Robinhood because a lot of stocks were blocked for purchase and this made them lose a lot of their customer base in 2021.
Steps To Take Before Closing Your Account
When deciding to close your account, you need to decide if you want to close it or just deactivate it. Either way, you will be able to access all of your documents.
If you decide you want to reopen your account, you will need to redo the application process, if you have closed your account.
If you just deactivate your account, you will still be able to check all documentation, and it is much easier to reactivate your account and resume trading on the app.
Regardless of whether you deactivate or close your account, you will have a balance of zero, meaning you have to sell all positions or withdraw your balance.
Hopefully, after reading this, you have a clear idea of how to close your Robinhood account. Once you know, it isn’t as tricky as you might expect!
Frequently Asked Questions
Is Robinhood Safe?
Yes, Robinhood is completely safe. There is no data stored on their servers.
Your trades are processed directly between you and the broker. So there is nothing to worry about.
On top of that, Robinhood doesn’t charge any transaction fees. Also, when you deposit money, you can withdraw it at any time.
Another thing worth mentioning is that Robinhood doesn’t offer margin trading. That means you can’t borrow money to increase the number of stocks you own.
Can I Trade Options On Robinhood?
No, you cannot trade options on Robinhood. The only financial instruments available on the site are stocks, ETFs (exchange traded funds), bonds, cryptocurrencies, and Bitcoin cash.
What Is The Minimum Balance Requirement?
Robinhood has a minimum balance requirement of $2. However, this amount gets automatically withdrawn every month.
So once you reach the monthly withdrawal limit, you won’t be able to access your account until you have enough money in it again.
Does Robinhood Charge Commission?
Yes, Robinhood charges a small fee per trade. It ranges from 0.05% to 0.15%. This fee applies to both buy and sell orders.
However, Robinhood offers a free stock market app for Android users. They also provide a web-based platform for iOS users.
Both platforms allow you to do everything without paying any commissions.
When you compare Robinhood to other brokers, they usually charge higher fees. For example, TD Ameritrade charges around 1% per share.
E*TRADE charges around 0.4% per share. Fidelity charges around 0.25% per share.
What Currencies Does Robinhood Support?
Currently, Robinhood supports USD, GBP, EUR, CAD, AUD, and MXN.
How Many Accounts Can I Open With Robinhood?
There is no upper limit on how many accounts you can open. But keep in mind that each account costs $10 per year.