These days everybody is obsessed with investing activities. There are two reasons, the first one is to secure the future with good returns and the second is that investing has become very easy these days, a lot of companies have come into the market which makes your investment process smooth and flexible. You just need to download the app, set up your account and you are on the way to your dream trading.
One of the most genuine companies out there nowadays is Robinhood. Which is known for its superior services with a “free trade” facility. But that “free trade” USP is not free. Investors who are investing with Robinhood are always in the searching mode for Robinhood hidden fees. So in this blog, we will pass you reliable information about Robinhood’s hidden fees, and everything that you want to know about Robinhood fees.
Let’s dive right in.
Robinhood always claims that they are a “Pioneer of commission-free investing”, they have never charged even a penny from their investors, even if any investor wants to open an account with them they will charge nothing. An investor only needs to pay for maintaining or transferring funds to their account.
But you know there are hidden fees, there are the costs that they never disclose openly to their customers.
As per the sources, Robinhood charges hidden fees from its customers even for printing paper. Yes, they charge $2 for confirming statement paper, and $5 for printing each paper statement. Not only this, but they also charge $75 whenever a customer transfers his account to their rival brokerage firm via ACAT. And if in case you restricted your account they will charge around $10 per trade. And if you want to discuss with a representative you have to pay $10 extra.
So, before starting investment with Robinhood or to avoid unwanted surprises just go through these Robinhood hidden fees structures.
1) Robinhood Gold
If you want to trade on margin i.e borrow money to buy securities from this platform, Robinhood gold is the best and premium feature serve by Robinhood. Robinhood Gold members are eligible to keep their access to Nasdaq market data and Morningstar professional research reports. For the initial 30 days, no fees will be charged by you but after that, you have to pay a $5 monthly fee. Together with this if you borrow over $1,000, a yearly interest fee will be levied with a 2.5% interest rate. And to keep your margin account in running you need at least $2,000 in your portfolio.
Robinhood never offers to invest in gold, they allow their customers to trade in securities that are ultimately directly or indirectly in concern with the gold.
2) Regulatory Trading Fee
It is another Robinhood hidden fee, that is associated with investors in terms of regulatory fee. As you know that Robinhood is registered with Financial Industry Regulatory Authority (FINRA) which is a US-based broker-dealer regulatory firm. For industrial regulations, Robinhood needs to pay some amount in support of the costs incurred with regulatory firm FINRA. Robinhood passes certain brokerage fees to its customers, it includes-
When customers sell more than 50 shares of their stock, they have to pay an activity fee. On equity shares, the fee is $0.000119 per share and for options trading, the fee is $0.002 per contract. Based on the order activity the limit on the fee is $5.95.
In the Regulatory trading fee, when you made sales, then per $1 million of principal you have to pay $5.10. You will be excluded from the fee till $500 sales.
3) Transfer Fee
Robinhood never charges for money transfer from one account to another, except for these two transfers:
ACATS is an Automated Customer Account Transfer Service. It is a service that facilitates the process of customer accounts transfer. If you transfer your account from Robinhood to its rival firm you have to pay $75 for every transfer. But if you want to transfer money into your bank account you need not pay any fee.
If you want to send a cheque to US-based businesses and individuals, Robinhood helps you out to send those cheques without any fee. But if you want your cheques to be sent overnight you have to pay a $20 fee.
4) Potential Fee
When it comes to the transactions, Robinhood never charges any fee. But when it comes to third-party services you need to pay for that. This fee is in terms of brokerage amount and will be passed to your brokerage account.
Foreign transaction fees
If you want to make foreign transactions that too in US dollars, you might need to use your Robinhood debit card and to use that card you have to pay a currency conversion fee.
If you want to use ATMs with Robinhood’s network you need not pay any fee, but if you use Out-of-network ATMs you need to pay a certain fee.
American depositary receipts or ADRs are the certificates that represent foreign stocks if American exchanges. For these certificates, you need to pay the fee of $0.01 to $0.03 per share called a custodial fee to the banks who issues these certificates.
Some merchants charge a minimum or certain fee whenever you use a debit card for the transactions.
To handle return cheques Robinhood never charges any fee, but the banks from where the cheque is originated or the recipient bank levied a certain amount of fee on you.
5) Service Fee
Robinhood charge a certain amount of service fee for providing hassle-free services, these include-
If you want to receive a physical copy of your share purchase statement you need to pay a fee of $5 per month that is called a paper statement fee.
There is a document comprising of all the details of a trade completed through your account, if you want that document you need to pay $2 for every piece of document.
If you want to mail overnight in the US you need to pay $20 to Robinhood, this mail will be sent by Robinhood so they charge for this.
If you want to send mail overnight to another country $50 will be charged by Robinhood.
Yes, you can minimize your Robinhood fee, although Robinhood charges very little as compared to its competitors, to avoid extra charges you can use the following tips:
1) Do Research Before Buying
Before starting a trade with Robinhood it is advisable to visit Robinhood’s support page and read carefully about their fee structure before applying.
2) Don’t Upgrade Your Plan
Always try to use the free account instead of its Gold plan. If you upgrade to higher plans you have to pay the higher fee for extra services they provide.
3) Always use In-Network ATMs
In-network ATMs of Robinhood levied no fee for using a debit card at certain stores. To find the nearest store or withdrawal location you just need to tap “Find ATMs” in your Robinhood app.
4) Go Paperless
As we have discussed in the article Robinhood charges a fee for paperwork or the statements you need on paper. Always use an electronic platform to avoid this Robinhood hidden fee.
5) Keep an Eye on Foreign Stocks
Before starting trading in foreign company shares, just do possible research about their potential fee from the bank that issues the depository receipt. You can compare fees and save your bucks.
6) Bank Transfer
Whenever you transfer your money to a rival brokerage firm Robinhood charges a certain fee, but if you transfer money to your bank account they never charge for it. So whenever you want to get back your money, always consider your bank transfer instead of investing your money in another competing firm.
If you are considering a Robinhood brokerage for trading, just go through the sums ups we have taken into consideration in this blog. No, doubt Robinhood is one of the best options for trading out there in the market. But Robinhood’s hidden fee structure sometimes left your pocket with uncherished surprises that you don’t wish for.
So, analyze the above-stated points and tips and make your trading experience the best possible.