Robinhood has no account fees, but you pay through spreads and other mechanisms
Robinhood does not charge a monthly account fee, and it does not charge per-trade commissions on stocks, ETFs, or options. That is the core of their business model. But "free trading" does not mean zero cost — you pay through the bid-ask spread (the difference between what you can sell for and what you can buy for), through margin interest if you borrow money, and through other channels depending on what you trade.
The absence of commission fees is real and saves money compared to traditional brokers. But understanding where Robinhood makes money — and where you actually pay — matters before you fund an account.
Key Takeaways
- Robinhood charges no monthly account fee and no per-trade commission on stocks, ETFs, options, or cryptocurrencies.
- You pay the bid-ask spread on every trade, which is the difference between the buy price and sell price — this is how Robinhood and market makers profit.
- If you use margin (borrowed money), you pay interest rates that vary based on your account balance and the amount borrowed.
- Robinhood Gold, the premium subscription, costs $5 per month and offers margin access and extended trading hours, but is optional.
- Certain advanced features like options trading require you to request and be approved for options permissions, but carry no separate fee.
How the bid-ask spread works and why it matters
Every stock, ETF, and cryptocurrency has a bid price (what buyers will pay right now) and an ask price (what sellers want right now). The spread is the gap between them. When you buy, you pay the ask price. When you sell, you receive the bid price. Robinhood profits by routing your order to a market maker who fills it, and the spread is where that cost lives.
On liquid stocks like Apple or Tesla, the spread is usually a penny or two per share — small enough that you barely notice it. On less-traded stocks or during market hours when volume is thin, the spread widens. A stock trading at $50 might have a $50.01 bid and $50.03 ask in normal conditions, but $49.95 bid and $50.10 ask during low-volume periods. That $0.15 difference is real money if you are trading 100 shares.
Robinhood does not set the spread — the market does. But Robinhood benefits when spreads are wide, because market makers pay Robinhood for order flow. This is legal and standard across the industry, but it means Robinhood has an incentive to route your order in a way that maximizes the spread rather than minimizes it for you.
Margin interest if you borrow money
Robinhood offers margin, which means you can borrow money from the broker to buy more securities than you have cash for. If you use margin, you pay interest on the borrowed amount. The interest rate depends on your account balance and how much you borrow, and it changes over time based on market conditions.
As of recent updates, Robinhood's margin rates for standard accounts start around 5% to 11% annually, depending on the size of your loan. Robinhood Gold members (see below) may receive slightly lower rates. The interest accrues daily and is deducted from your account monthly. If you borrow $1,000 at 8% annual interest, you owe roughly $6.67 per month in interest alone.
Margin is optional — you do not have to use it. Most new traders should avoid it because borrowing to invest amplifies both gains and losses. If the stock drops, you still owe the full borrowed amount plus interest.
Robinhood Gold subscription ($5 per month)
Robinhood Gold is a paid subscription tier that costs $5 per month. It is optional and not required to trade. Gold members receive margin access (the ability to borrow money), access to extended trading hours (4:00 AM to 8:00 PM ET instead of the standard 9:30 AM to 4:00 PM), and a few other perks like stock research and educational content.
If you do not pay for Gold, you still have a Robinhood account and can trade during regular market hours. You simply cannot use margin or trade before and after the standard market close. For most beginning traders, the standard account is sufficient, and the $5 monthly fee is an unnecessary cost.
Gold also comes with lower margin interest rates than the standard account, but only if you are already planning to borrow. If you are not using margin, Gold saves you nothing.
Options trading and permissions
Robinhood allows options trading, but you must request options permissions and be approved. There is no fee to request or to receive approval. Once approved, you can trade options at no per-contract commission.
However, you still pay the bid-ask spread on options, and spreads on options are often wider than spreads on stocks because options are less liquid. A stock option might have a $0.05 spread, which on a contract representing 100 shares means $5 per trade. Options also carry higher risk than stocks because their value can move faster and expire worthless.
Cryptocurrency trading fees
Robinhood offers cryptocurrency trading (Bitcoin, Ethereum, and others) with no per-trade commission. You pay the bid-ask spread, just as with stocks. Cryptocurrency spreads tend to be wider than stock spreads because crypto markets are less regulated and more volatile.
Robinhood does not charge a separate fee to hold cryptocurrency in your account, and you cannot transfer crypto out of Robinhood to another wallet or exchange — you can only buy and sell within the app.
Wire transfers and other account services
Robinhood does not charge a fee to deposit money via ACH transfer (the standard bank transfer that takes 1 to 3 business days). Wire transfers into Robinhood are also free. Withdrawals via ACH are free, but wire transfers out cost $5.
If you close your account, there is no fee. If you transfer your holdings to another broker, Robinhood does not charge an outgoing transfer fee, though the receiving broker may charge an incoming fee.
How Robinhood makes money if trading is free
Robinhood's revenue comes from several sources: the bid-ask spread (through market maker relationships), margin interest, Robinhood Gold subscriptions, and payment for order flow (money market makers pay Robinhood to route orders to them). Robinhood also earns interest on the cash in customer accounts that sits uninvested.
This model works because Robinhood has low overhead compared to traditional brokers — no physical offices, no phone support, no financial advisors. The trade-off is that you get a mobile app and web platform, but limited customer service and no personalized guidance.
Frequently Asked Questions
Does Robinhood charge a monthly fee just to have an account?
No. A standard Robinhood account has no monthly fee. Robinhood Gold costs $5 per month but is optional. If you do not pay for Gold, you have no recurring charges simply for holding an account.
Why is my buy price higher than the stock price I see online?
You are seeing the bid-ask spread. The price you see online is usually the last trade price or the midpoint between bid and ask. When you buy, you pay the ask price (higher). When you sell, you get the bid price (lower). The difference is the spread, and it goes to the market maker and Robinhood, not to you.
Can I trade without paying anything?
You can trade without paying commissions or account fees, but you cannot avoid the bid-ask spread — that is built into every trade. You also cannot use margin or trade outside regular market hours without paying for Robinhood Gold. For basic stock and ETF trading during market hours, the only cost is the spread.
What happens if I use margin and the stock drops?
You still owe the full amount you borrowed plus interest, even if the stock loses value. If your account drops below a certain level (the maintenance requirement), Robinhood will force you to sell positions to cover the loan. This is called a margin call, and it can lock in losses. Avoid margin unless you fully understand the risk.
Is Robinhood cheaper than other brokers?
Robinhood has no commission fees, which matches most major brokers today (Fidelity, Charles Schwab, E-Trade all offer commission-free trading). The real difference is in spreads, customer service, and research tools. Robinhood's spreads are competitive but not always the tightest, and customer service is limited to email and in-app chat.