Robinhood is neither a checking nor a savings account
Robinhood is a brokerage platform—a place to buy and sell stocks, options, cryptocurrencies, and other investments. It is not a bank, and it does not offer checking or savings accounts in the traditional sense. When you open a Robinhood account, you are opening an investment account, not a deposit account.
That said, Robinhood does have a cash management feature that holds your uninvested money. This feature works differently from a checking or savings account at a bank, and understanding those differences matters if you are deciding where to keep your money.
Key Takeaways
- Robinhood is a brokerage for buying and selling investments, not a bank offering checking or savings accounts.
- Robinhood's cash management feature holds uninvested money but does not offer the same protections or features as a bank account.
- Money in Robinhood cash management is not FDIC-insured the way bank deposits are, though it is held at partner banks.
- You cannot write checks or use a debit card directly from Robinhood cash management like you would with a checking account.
- If you need a true checking account for everyday spending, you will need to open one at a bank separately.
What Robinhood's cash management actually does
When you deposit money into Robinhood, it sits in a cash management account until you use it to buy investments or withdraw it. Robinhood sweeps this cash to partner banks—currently including banks like Sutton Bank and others—where it earns a small amount of interest.
The interest rate on Robinhood cash management changes based on market conditions and the rates the partner banks offer. You can see the current rate on Robinhood's website, but it is not may provide and may be lower than rates at traditional savings accounts or money market accounts at banks.
This is not the same as a savings account. A savings account at a bank is a deposit product backed by FDIC insurance up to $250,000. Robinhood cash management is a brokerage feature—your money is held at banks, but the structure and protections are different.
FDIC insurance and what it means for your money
Bank deposits are protected by FDIC insurance, which means if the bank fails, the government guarantees your money up to $250,000 per account category. Money in Robinhood cash management is not directly FDIC-insured by Robinhood itself.
However, Robinhood states that cash held at its partner banks may be covered by FDIC insurance through those banks. The coverage depends on how the money is structured at the partner bank and whether it qualifies as a deposit account under FDIC rules. This is more complicated than the straightforward FDIC protection you get with a bank savings account, and the coverage is not may provide.
If protecting your money with full FDIC insurance is important to you, a traditional savings account at a bank is clearer and simpler. You know exactly what is covered and how.
How Robinhood cash management differs from checking
A checking account lets you write checks, use a debit card, set up automatic bill payments, and move money in and out easily. Robinhood cash management does not offer these features. You cannot write a check from Robinhood or use a debit card tied to your cash balance.
You can transfer money out of Robinhood to a linked bank account, but this takes one to three business days. If you need to pay a bill today or make an immediate purchase, Robinhood cash management will not work the way a checking account does.
Robinhood also does not offer overdraft protection or overdraft fees—because it is not a checking account. If you try to buy an investment and do not have enough cash, the transaction simply fails.
When Robinhood cash management makes sense
Robinhood cash management is useful if you are an active investor who keeps money in Robinhood between trades and wants it to earn a small return rather than sit idle. It is a holding place for your investment capital, not a replacement for a checking account.
If you are new to investing and want to keep some money in cash while you learn, Robinhood cash management can work for that. But if you need a place to deposit your paycheck, pay bills, and manage everyday spending, you need a checking account at a bank.
Many people use both: a checking account at a bank for daily expenses and bills, and a Robinhood account for investing. The two serve different purposes.
How to move money between Robinhood and a bank
If you decide Robinhood is not the right place for your money, moving it out is straightforward. You link a bank account to Robinhood and request a transfer. The money typically arrives in one to three business days, depending on your bank.
Robinhood does not charge fees for transfers out, but your bank may charge a fee for incoming transfers from a brokerage. Check with your bank before you transfer to see if there are any costs.
If you have investments in your Robinhood account, you do not have to sell them to move cash out. You can transfer just the cash portion while leaving your stocks or other holdings in place.
Frequently Asked Questions
Can I use Robinhood like a checking account for everyday spending?
No. Robinhood has no debit card, no check-writing, and no bill pay features. Transfers to your bank take one to three days. For everyday spending and bills, you need a checking account at a bank.
Is my money safe in Robinhood cash management?
Money held at Robinhood's partner banks may have FDIC coverage, but this is not may provide and depends on how the account is structured. A traditional bank savings account offers clearer, more straightforward FDIC protection up to $250,000.
What interest rate does Robinhood cash management pay?
The rate varies and is set by Robinhood's partner banks. Check Robinhood's website for the current rate. It often changes and may be lower than rates at traditional savings accounts or money market funds.
Can I open a checking account through Robinhood?
No. Robinhood is a brokerage, not a bank. It cannot offer checking or savings accounts. You must open a checking account at a bank if you need one.
What happens to my cash if Robinhood goes out of business?
Robinhood is a brokerage, not a bank, so it is regulated differently. Cash held at its partner banks would be protected by those banks' FDIC coverage, but the exact protection depends on the account structure. This is less clear than the protection you get with a bank account.