Robinhood (NASDAQ:HOOD) is making a major shift in how we offer margin investing to better serve our customers on their financial journey. Robinhood notes in a blog post that it is pleased to launch what they claim to be “the lowest margin rates among brokerages, now offering rates ranging from 5.7% to 6.75%.”
Customers will now receive “a single low rate based on their total margin balance.”
Here are the rates customers will receive at Robinhood:
- 6.75% for up to $50K
- 6.55% starting at $50K and up to $100K
- 6.25% starting at $100K and up to $1M
- 6% starting at $1M and up to $10M
- 5.95% starting at $10M and up to $50M
- 5.7% starting at and above $50M
Steve Quirk, Chief Brokerage Officer at Robinhood, said:
“We’re always looking to upend the status quo on behalf of our customers. Whether someone has a balance of a few thousand dollars, or millions, they automatically have access to the lowest margin rates among leading brokerages with absolutely no haggling required.”
For the last 10+ years, they’ve grown up right alongside their customers, and as they expand their platform’s suite of products and services “to provide better tools for more advanced investors, it’s time to change the way we approach margin lending at Robinhood.”
Their customers have different needs, “varying levels of investment experience, and different financial goals, which means the one-size-fits all approach to margin investing simply no longer makes sense.”
Unlike other brokerages, there are “no closed-door negotiations required. Once a customer is approved to trade with margin, their rate is automatic based on the margin balance of their account.”
As customers consolidate their finances from other brokerages into Robinhood, they “can take advantage of our new margin rate structure to access better rates and even more buying power.”
Margin investing allows customers “to borrow money from Robinhood and leverage their holdings to purchase securities.”
This gives them access to additional buying power “based on the value of certain securities in their investing account.”
Margin can be a useful investing tool “that provides flexibility if a customer sees an opportunity in the market and wants to invest more right away without needing to make a deposit from their bank.”
Margin investing access isn’t automatic—customers “must apply and will only have access if they meet eligibility requirements.”
Margin investing is risky and it’s not appropriate for everyone.
Offering a tiered margin structure is “the latest example of how Robinhood is committed to providing the best user experience for our more advanced customers.”
Over the last several years, they’ve launched “a number of tools for more seasoned investors including 24 Hour Market, Advanced Charts, Options Trading in Cash Accounts, Stock Lending, Shareholder Q&A, Options Rolling, and more.”
Robinhood Gold subscribers also “get their first $1,000 of margin with no interest. Plus, coming soon they will also receive a 1% unlimited deposit boost on all eligible incoming brokerage deposits, with no cap.”
