Nowadays, the trading world is expanding at a high speed and it is becoming a usual platform for investors. Whether it is trading stocks or cryptocurrencies, this digital market shows the future for some. There are even applications that provide services on this topic, one of which is Robinhood.
It is considered one of the pioneers of the trading industry, and in 2015 the business launched its mobile app. The benefit of using this app is that you will not be charged a fee for every transaction. That is why this is one of the options that investors lookup first.
But of course, in order to start investing, you first need the funds. You could get the money from a bank account, but what if you do not have one? There are other options that Robinhood provides, and we are going to tell you more about them. So stick around as we are discussing this app and also what risks you may encounter.
Robinhood • A No-Commissions Service
This investing app is among the other competitors, as it offers the opportunity to not pay commissions for trades. It offers different types of services, and it can work as an account where you can spend money on purchases. For new people, be careful, since the market prices always rise and decrease abruptly.
Robinhood offers you brokerage accounts that you can use to start your investments. But keep in mind that it is just one account per customer since you have to register your SSN. And on top of it, there are some features that you can get from the app:
Cash Management Account
This feature lets you make deposits, pay online bills, access ATMs, and do other transactions while earning interest. With this account, you can get with it a debit card issued by Sutton Bank, but you can also get a digital one for services like Apple or Samsung Pay.
You can get earn about a 0,50 % annual percentage yield if you do not invest the money, thanks to the Deposit Sweep Program. You can also get FDIC insurance for up to $1,25M.
However, even with these benefits, your brokerage account has the same balance as your cash management account. In other words, you will have both the money that you want to dedicate to investments and to expenses in the same account.
If you are deciding in opening a cash management account on Robinhood, well, you cannot anymore. The company does not let new people apply for this feature. If you already have one, then we recommend that you change to a Spending Account.
Now with this new option, you will have some of the benefits that cash management possesses. But there is the addition of having this account separated from your brokerage account.
This means that you can have the money you want to invest on one side, and the one you want to spend on things on another. In fact, you do not need a brokerage account in order to open the spending one.
You can order a debit card as well, and you have FDCI insurance for up to $250,000. Even better, you can also receive bonuses and rewards for spending with your card. Right now, Robinhood accepts new clients, so be sure to get this account if you just want to spend money.
How To Apply For a Robinhood Brokerage Account
It is very simple, but you need to follow some requirements in order to apply for it. These are:
- You must be 18 years old or older
- You need to possess a Social Security number (Only one account per SSN)
- Be a U.S. citizen or a permanent resident. Having a U.S. Visa works too
- Live in a U.S. residence
If you are outside of the country, then Robinhood will deny the creation of the account. Once you confirm that you fulfill the requirements, you will have to sign up on their website or the app.
To create the account, you need to support your first name, last name, email address, and password. Then follow the prompts and submit the application. Wait for acceptance, and in approximately a week you will hear a response. Be prepared, as they could request more proof of identification (if needed), and that can take from 5 to 7 days for review.
Transferring Funds To The Account
Do not worry if you do not have a bank account that you cannot link to your Robinhood account. Luckily, there are different methods that you can use, and these come from not only the app itself but from other sources too.
Setting up direct deposits is available in the app for those who receive paycheck or government deposits. When you first open your Spending account, you receive both routing and account numbers needed for the process. If you had first a Cash Management account and transitioned into the spending one, then the old numbers will not work.
After having your numbers in hand, you may proceed with three methods of setting up online:
- Through employer. You enter through your payroll providers website and use your account information for the deposit
- Through Robinhood itself. In this scenario, you will have to log in to your employer’s website through the app. Search for the name of the website, and if it does not appear, then this option will not work
- Manually with a pre-filled form. This option might take long, as you need to first get a digital pre-filled form that you have to submit to HR (Human Resources) in your company.
The money will arrive normally between your first and second pay cycles. This can vary depending on the option that you choose.
Other commonly-known applications have the ability to fund your Robinhood account. They are easy to set up and are used for daily transactions, so you should take this alternative if you do not like direct deposits:
One of the best cash apps, you can link your account to Robinhood as you would normally do with bank accounts. Having a Paypal Cash Card is beneficial for your trades, and you would not have to apply for a debit card for your spending account.
This app can also transfer money to your brokerage account with ease. Of course, you will be asked to log in for confirmation purposes.
The final method is by using the debit card that Netspend offers. You can take advantage of it to fund your brokerage account. You could even add other platforms’ debit and prepaid cards, but this is one of the most known among the people.
Get Ready Before Signing In Robinhood
We have walked you through some of the ways that you can fund your account without the need for a bank account. However, it is still recommended that you link a bank account to it if you have one. Some people feel more comfortable with their bank of preference, and it will take you no time to do so.
One thing to keep an eye out for is that this app does not accept funding in cash or mailed checks. If you are having trouble, you can contact their customer support by requesting a phone call through the app or receiving help by mail.