Buying bonds on Robinhood: the basic steps

Robinhood lets you buy individual bonds directly through the app or website. You search for the bond you want, review its terms and yield, and place an order just like you would for a stock. The bond sits in your account until it matures or you sell it. Robinhood does not charge a commission on bond trades, though the price you pay includes a markup that Robinhood takes.

The process takes about five minutes once you know which bond you want. You do not need a separate brokerage account or special permission — if you can trade stocks on Robinhood, you can trade bonds. The main difference from stocks is that bonds trade less frequently and in smaller quantities, so the selection available at any moment depends on what dealers have in inventory.

Key Takeaways

  • Search for bonds by issuer name, ticker, or CUSIP number in the Robinhood app, then review the coupon rate, maturity date, and current price before you buy.
  • Robinhood charges no commission on bond purchases, but the price includes a dealer markup that varies by bond type and market conditions.
  • You can buy corporate bonds, Treasury bonds, and municipal bonds through Robinhood, though the inventory changes based on what dealers have available.
  • Bonds settle in one business day, meaning your cash is held until the trade clears and you own the bond outright.
  • You can hold the bond until maturity, sell it early through Robinhood, or let it be called if the issuer decides to redeem it before the maturity date.

Finding and searching for bonds in the app

Open Robinhood and tap the search icon at the bottom. Type the company or government name, the bond's ticker symbol, or its CUSIP number — a nine-character code unique to each bond. For example, searching "Apple" will show Apple corporate bonds currently available. Treasury bonds appear under "US Treasury" or by their specific maturity date.

The search results show you every bond matching your query that Robinhood has in inventory that day. Each result displays the coupon rate (the interest you will receive), the maturity date (when you get your principal back), the current price, and the yield to maturity (the total return if you hold until the end). Tap any bond to see more details, including the credit rating if it is a corporate or municipal bond.

Inventory changes constantly because Robinhood sources bonds from dealers. A bond you see today might not be available tomorrow, and a bond you want might appear next week. If you do not see the specific bond you are looking for, check back in a few days or search for a similar bond from the same issuer with a different maturity date.

Understanding the price, yield, and markup

Bond prices are quoted as a percentage of face value. A bond priced at 102 costs 102% of its $1,000 face value, or $1,020. A bond priced at 98 costs $980. The coupon rate is fixed — a 3% coupon on a $1,000 bond pays $30 per year, no matter what you paid for it. The yield to maturity is what matters most: it tells you the actual annual return you will earn if you buy at the current price and hold until maturity.

Robinhood does not charge a commission, but the price you see already includes a dealer markup. This markup is how Robinhood makes money on bond trades. The markup varies: Treasury bonds typically have smaller markups (often under 1%), while corporate and municipal bonds can have markups of 1% to 3% or more. You cannot see the markup separately — it is baked into the price. This is standard across all brokers, not unique to Robinhood.

Before you buy, compare the yield to maturity against current interest rates and the bond's credit rating. A corporate bond paying 4% yield is attractive if the company is stable and rates are low, but risky if the company is struggling or rates have risen sharply. Robinhood shows the rating on the bond details page.

Placing a bond order and settlement

Once you have decided on a bond, tap it and select "Buy." Robinhood shows you the current price and asks how many bonds you want. Most individual bonds have a minimum purchase of one bond ($1,000 face value). Enter the quantity and review the total cost, which includes the price plus any accrued interest owed to the previous owner since the last coupon payment.

Tap "Review Order" to confirm. Robinhood shows you the coupon rate, maturity date, and yield one more time. If everything looks right, tap "Place Order." The order executes immediately if the bond is in stock. Your cash is held, and the bond appears in your portfolio as "pending" for one business day while the trade settles. After settlement, you own the bond outright and will receive coupon payments on the scheduled dates.

If the bond is not in stock when you place the order, Robinhood will not execute it. You will see a message saying the bond is unavailable. This is different from stocks, where you can place an order to buy at a future price. With bonds, you buy what is available now or wait for the bond to reappear in inventory.

Types of bonds available on Robinhood

Treasury bonds are issued by the U.S. government and backed by the full faith and credit of the United States. They carry virtually no default risk. Robinhood offers Treasury bills (under one year), Treasury notes (one to ten years), and Treasury bonds (over ten years). These typically have the lowest yields but also the lowest risk.

Corporate bonds are issued by companies to raise money. They pay higher yields than Treasuries because they carry default risk — the company could fail to pay you back. Robinhood shows the credit rating (AAA is safest, D is in default) so you can assess the risk. Investment-grade bonds (BBB and above) are considered safer; high-yield or "junk" bonds (BB and below) pay more but are riskier.

Municipal bonds are issued by states, cities, and local agencies. Many municipal bonds are tax-exempt at the federal level, meaning you do not owe federal income tax on the interest. Robinhood shows which bonds are tax-exempt. The yields are often lower than corporate bonds because of the tax benefit, but the actual after-tax return can be higher if you are in a high tax bracket.

Selling a bond before maturity

You do not have to hold a bond until maturity. You can sell it anytime through Robinhood by tapping the bond in your portfolio and selecting "Sell." Robinhood will show you the current market price, which may be higher or lower than what you paid depending on interest rate changes and the bond's credit quality.

If interest rates have risen since you bought the bond, the price will be lower — buyers demand a discount to compensate for the lower coupon. If interest rates have fallen, the price will be higher. This is why bond prices move inversely to interest rates. When you sell, you receive the sale price minus accrued interest owed to you since the last coupon payment, and the trade settles in one business day.

Selling early means you lock in a gain or loss. If you sell at a loss, you can use that loss to offset capital gains elsewhere in your portfolio for tax purposes. If you sell at a gain, you owe capital gains tax on the profit. Keep track of your purchase price and sale price so you can report this correctly to the IRS.

What happens at maturity or if a bond is called

When a bond reaches its maturity date, Robinhood automatically deposits the face value ($1,000 per bond) into your account as cash. You also receive the final coupon payment on that date. The bond disappears from your portfolio and the cash is available to spend or reinvest.

Some bonds are callable, meaning the issuer can redeem them early if interest rates fall. For example, if you buy a corporate bond paying 5% and rates drop to 2%, the company might call the bond and refinance at the lower rate. When a bond is called, you receive the call price (usually the face value) and the bond is removed from your account. Robinhood shows the call date and call price on the bond details page before you buy, so you can decide whether the risk is acceptable.

Frequently Asked Questions

Can I set up automatic reinvestment of coupon payments?

Robinhood does not offer automatic reinvestment of bond coupons. When you receive a coupon payment, it lands in your cash balance. You can then use that cash to buy another bond, but you must do it manually. Some other brokers offer automatic reinvestment; if that feature matters to you, compare Robinhood against alternatives.

What is accrued interest and why do I have to pay it?

Accrued interest is the coupon payment that has built up since the last payment date. When you buy a bond between coupon dates, you pay the seller for the interest they earned while holding it. At the next coupon payment, you receive the full coupon, which compensates you for the accrued interest you paid. This is standard practice and happens on all bond trades.

Can I buy fractional bonds on Robinhood?

No. Robinhood requires you to buy whole bonds in increments of one. The minimum purchase is one bond, which costs around $1,000 plus accrued interest. If you want to invest less than $1,000, you can buy bond funds or ETFs instead, which Robinhood also offers and allow fractional shares.

How do I know if a bond is safe?

Check the credit rating shown on the bond details page. Treasury bonds are backed by the U.S. government and are considered the safest. Corporate and municipal bonds with ratings of BBB or higher are considered investment-grade and relatively safe. Bonds rated BB or lower are higher-risk. Also review the issuer's financial health if you can — for companies, check recent earnings reports; for municipalities, check their budget status.

What happens if the bond issuer defaults?

If a company or municipality fails to pay a coupon or principal, you may lose some or all of your investment. Bondholders are paid before stockholders in a bankruptcy, but there is no may provide you will recover your full investment. This is why credit ratings matter — they reflect the risk of default. Treasury bonds have no default risk because they are backed by the U.S. government.