Margin lets you borrow money from Robinhood to buy stocks, but you pay interest and risk losing more than you invested

Margin is a loan from Robinhood that lets you buy stocks with money you don't have in your account. When you use margin, Robinhood lends you cash and holds your existing stocks as collateral. You pay interest on the borrowed amount, and if your account value drops far enough, Robinhood can force-sell your positions to recover the loan — even if you don't want to sell.

Margin is not assistance programs and not a way to multiply small accounts into large ones without risk. It multiplies both gains and losses. A 20% drop in stock price wipes out 100% of your money if you borrowed an equal amount. Most new investors should not use margin.

Key Takeaways

  • Robinhood charges interest on margin loans, and the rate changes based on how much you borrow and market conditions.
  • You need at least $2,000 in your account to use margin, and Robinhood can force-sell your stocks if your account falls below the maintenance requirement.
  • Margin amplifies losses: if you borrow $5,000 and stocks drop 50%, you lose your entire $5,000 deposit plus still owe Robinhood money.
  • Robinhood Gold (a paid subscription) gives you more borrowing power, but the interest cost and forced-sale risk remain the same.

How to turn on margin in your Robinhood account

To use margin on Robinhood, you must first enable it in your account settings. Open the app, tap the Account icon (usually bottom right), select Account Settings, then look for Margin or Investing. Robinhood will show you the margin agreement — read it, because it explains that they can sell your stocks without asking you first.

After you enable margin, Robinhood will show you how much you can borrow based on your account balance. This number changes as your stocks gain or lose value. You do not need to do anything else to "activate" margin; once it is on, any purchase that exceeds your cash balance automatically uses borrowed money.

Robinhood requires a minimum account balance of $2,000 to use margin at all. If your account drops below $2,000, margin is disabled until you deposit more cash.

How much you can borrow and what it costs

The amount you can borrow depends on your account value and whether you have Robinhood Gold. With a standard margin account, you can borrow up to 50% of your account value — so a $4,000 account lets you borrow $2,000. With Robinhood Gold (a $5 per month subscription), you can borrow up to 2 times your account value, meaning a $4,000 account lets you borrow $4,000.

Robinhood charges interest on the money you borrow. The rate varies and is not fixed; Robinhood publishes rates on their website, but they change based on how much total margin is borrowed across all users and broader market conditions. As of recent updates, rates have ranged from around 5% to 11% annually, though this varies. You pay interest daily on the borrowed amount, whether or not your stocks make money.

Interest accrues even while you hold the stock. If you borrow $5,000 at 8% annual interest and hold it for one year, you owe $400 in interest alone, separate from any losses the stock itself might have.

The forced-sale rule and maintenance requirements

Robinhood requires you to maintain a minimum account value relative to what you borrowed. This is called the maintenance requirement, and it is usually 30% of the total value of stocks you bought with margin. If your account value drops below this threshold, Robinhood will automatically sell your positions — without asking you — to bring your account back into compliance.

This forced sale can happen in minutes during market hours. You do not get to choose which stocks sell; Robinhood decides. You may be forced to sell winners and losers alike, locking in losses you did not intend to take. If the market drops sharply, thousands of margin accounts can trigger forced sales at the same time, which can accelerate the price drop further.

Example: You have $5,000 cash and borrow $5,000 on margin, buying $10,000 worth of stock. Your maintenance requirement is roughly $3,000 (30% of $10,000). If your stocks drop to $6,500, your account is now below $3,000 in maintenance value, and Robinhood sells enough of your position to get you back in line — you lose the stocks and still owe interest on the borrowed amount.

Interest rates and how they are calculated

Robinhood's margin interest rate is tiered based on how much you borrow. Borrowing $1,000 costs less per year than borrowing $50,000, because larger balances get lower rates. You can see Robinhood's current rates on their website under Margin Rates.

Interest is calculated daily and charged to your account. If you borrow $5,000 at 8% annual interest, you owe roughly $1.10 per day (8% ÷ 365 days). This compounds; if you do not pay it back, the interest accrues and you owe interest on the interest. Most investors who use margin pay it back within weeks or months, so the total interest cost is smaller, but it is still a real cost that reduces your returns.

You can pay back margin at any time by depositing cash into your account. The borrowed amount is repaid first, then interest, then any remaining cash sits in your account for future trades.

When margin gets you into trouble

Margin is most dangerous during market downturns. If you borrow to buy stocks and the market drops 30%, your losses are magnified. A 30% drop on a $10,000 all-margin position wipes out your entire $5,000 deposit and leaves you owing Robinhood $2,000 plus interest — you lost more than 100% of your money.

Forced sales also lock in losses at the worst time. When the market is falling and your account triggers a maintenance call, Robinhood sells your stocks at depressed prices. You cannot wait for a recovery; the sale happens automatically. This is especially painful if you borrowed to buy solid companies that simply fell with the broader market.

Margin also tempts overconfidence. Because borrowing feels easy on Robinhood, new investors often use it before they have experience managing losses. The first time you see your account drop 40% in a week, the psychological pressure is real — and margin makes that drop twice as large as it would have been with cash alone.

Robinhood Gold and margin borrowing limits

Robinhood Gold is a $5 per month subscription that gives you higher margin borrowing limits and a few other perks like extended-hours trading. With Gold, you can borrow up to 2 times your account value instead of 50%. On a $5,000 account, that means borrowing up to $5,000 instead of $2,500.

Higher borrowing limits sound appealing, but they do not change the core risk. You still pay the same interest rates, you still face forced sales if your account drops, and your losses are still magnified. Gold is useful only if you have experience with margin and a specific strategy that requires higher limits. For most people, the $5 per month is money spent on a feature that increases risk without increasing returns.

Frequently Asked Questions

Can I lose more money than I put in if I use margin?

Yes. If you deposit $5,000 and borrow $5,000 to buy $10,000 in stock, and that stock drops to $3,000, you have lost your entire $5,000 deposit plus you still owe Robinhood $2,000 (plus interest). You lost 140% of your initial money. This is why margin is dangerous for new investors.

What happens if I cannot pay back the margin loan?

Robinhood will force-sell your stocks to recover the loan before you owe them anything. If your account value is not enough to cover the loan and interest, you would owe the difference, but Robinhood's automatic selling usually prevents that. The real damage is that you lose your positions at the worst time.

Does Robinhood charge fees in addition to interest?

Robinhood does not charge a separate margin fee beyond the interest rate on borrowed money. However, Robinhood Gold costs $5 per month. Some brokers charge additional fees; Robinhood's main cost is the interest itself.

Can I use margin to buy options or crypto on Robinhood?

Margin rules vary by asset type. You can use margin to buy stocks, but options and crypto have different rules and higher risk. Check Robinhood's current policy before attempting to use margin for anything other than stocks.

How do I turn off margin if I change my mind?

Go to Account Settings and disable margin. Robinhood will require you to pay back any borrowed money first. Once margin is off, you can only trade with cash you have in your account.