Robinhood does not offer a high yield savings account
Robinhood is a brokerage platform built for stock and options trading, not for holding cash in savings. The company does not have a savings product with interest rates comparable to what banks and credit unions offer. If you have cash sitting in a Robinhood account, it typically earns little to no interest—sometimes held in a money market fund that pays a minimal rate, depending on market conditions and Robinhood's current offerings.
Robinhood does offer a cash management feature called Robinhood Cash Management, which sweeps uninvested cash into partner banks' money market funds. This is not the same as a high yield savings account. The rate varies based on the underlying money market fund performance and changes frequently. You should check Robinhood's current rates directly, as they do not advertise a fixed APY the way a savings account does.
Key Takeaways
- Robinhood's Cash Management feature is not a savings account and does not offer rates comparable to high yield savings accounts at banks.
- Cash held in Robinhood may earn interest through money market funds, but the rate fluctuates and is typically lower than dedicated savings products.
- If you want a high yield savings account, you need to open one at a bank or credit union separate from your brokerage account.
- Robinhood's main purpose is trading stocks and options, not storing cash for interest income.
How Robinhood's Cash Management Works
When you deposit cash into Robinhood, the platform can sweep that money into money market funds held at partner banks. This is different from a traditional savings account where a bank holds your deposit and pays you interest. With Robinhood's system, your cash is technically invested in a money market fund, which holds short-term debt securities and aims to maintain a stable value while paying dividends.
The rate you earn depends on the performance of the underlying money market fund, not on a rate Robinhood sets. Money market funds are sensitive to changes in short-term interest rates set by the Federal Reserve. When rates rise, money market funds typically pay more. When rates fall, they pay less. Robinhood does not may provide a specific APY, and the rate can change daily or weekly.
You can check Robinhood's current money market fund rates on their website, but you should verify the exact rate before depositing large amounts of cash. The rate is not locked in and will fluctuate over time.
Why High Yield Savings Accounts Are Different
A high yield savings account at a bank or credit union is a deposit account, not an investment. The bank holds your money and pays you a fixed or variable APY. That rate is set by the bank and advertised upfront. Banks that offer high yield savings accounts typically pay between 4% and 5% APY as of late 2024, though rates change as the Federal Reserve adjusts its benchmark rate.
High yield savings accounts are also insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per bank. This means if the bank fails, your money is protected. Robinhood's money market funds do not carry FDIC insurance in the same way. While money market funds are generally considered low-risk, they are not bank deposits and do not have the same legal protection.
If your goal is to earn interest on cash you are not actively trading with, a high yield savings account at a separate bank will almost always pay more than Robinhood's cash management feature.
Where to Open a High Yield Savings Account Instead
High yield savings accounts are offered by online banks, traditional banks, and credit unions. Online banks typically offer the highest rates because they have lower overhead costs. Some well-known options include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank, though you should compare current rates across multiple providers before opening an account.
Credit unions also offer savings accounts, sometimes with competitive rates. If you are a member of a credit union, check their current rates—they may match or exceed online bank rates. You can also search for credit unions in your area through the CO-OP Network or Allpoint to see what is available.
Opening a high yield savings account takes 10 to 15 minutes online. You will need your Social Security number, a government-issued ID, and proof of address. Most banks can verify these electronically. Once the account is open, you can transfer money from your Robinhood account or any other bank account to start earning interest.
Should You Keep Cash in Robinhood at All?
If you are an active trader and use Robinhood to buy and sell stocks regularly, keeping some cash in the account makes sense for quick trades. You avoid the delay of transferring money from a savings account each time you want to invest. In that case, Robinhood's cash management feature is a reasonable place to park money between trades.
If you are not trading frequently and simply want to earn interest on cash, Robinhood is not the right tool. The rates are too low and the product is not designed for that purpose. Move the cash to a high yield savings account at a bank instead.
Some traders use both: a high yield savings account for emergency funds and longer-term savings, and a Robinhood account with cash management for trading capital. This approach lets you earn a competitive rate on most of your money while keeping trading cash accessible.
How to Transfer Cash Out of Robinhood
If you decide to move cash from Robinhood to a high yield savings account, the process is straightforward. Log into your Robinhood account, go to the Account menu, and select "Transfer." Choose "Transfer to Your Bank" and enter the amount. Robinhood will ask you to confirm the receiving bank account.
The transfer typically takes 1 to 3 business days, depending on your bank. Robinhood does not charge a fee for transfers out. Once the money arrives at your savings account, it will begin earning interest according to that bank's APY.
If you have unsettled trades or pending transactions, Robinhood may not allow you to transfer the full balance immediately. Wait for trades to settle (usually 2 business days for stocks) before initiating the transfer.
Frequently Asked Questions
Does Robinhood pay interest on cash?
Robinhood's Cash Management feature sweeps cash into money market funds that pay interest, but the rate is low and fluctuates daily. It is not a high yield savings account. If you want competitive interest rates, open a savings account at a bank instead.
What is the current APY on Robinhood cash management?
Robinhood does not advertise a fixed APY because the rate depends on the underlying money market fund and changes frequently. Check Robinhood's website or app for the current rate before depositing large amounts of cash.
Is Robinhood cash management FDIC insured?
Robinhood's money market funds are not FDIC insured in the traditional sense. However, the funds are held at partner banks that are FDIC insured. The protection is more complex than a direct bank deposit. A high yield savings account at a bank offers clearer FDIC coverage up to $250,000.
Can I use Robinhood as my main savings account?
No. Robinhood is a brokerage platform for trading, not a savings platform. The interest rates are too low, and the account is not designed for storing money long-term. Use a high yield savings account at a bank for that purpose.
How long does it take to transfer money from Robinhood to a savings account?
Transfers from Robinhood to your bank typically take 1 to 3 business days. Robinhood does not charge a fee. Make sure any pending trades have settled before you initiate the transfer.