Brokerage cash sweep program interest rate (APY) | Robinhood

Brokerage cash sweep program interest rate (APY)

How do I sign up?

  1. Go to Account (person icon) → Menu (3 bars)
  2. Select Investing
  3. Scroll down and select Enable cash sweep
  4. Follow the prompts to complete sign up

How do I earn interest?

Robinhood doesn’t pay interest–instead, we move your eligible uninvested cash (unrestricted cash intended for investing that has not yet been invested or spent) into our network of FDIC insured program banks that hold and invest your cash. These FDIC insured program banks then pay interest on those deposits, minus any fees paid to Robinhood, which you receive as part of the brokerage cash sweep program.

What does it mean to earn interest?

You’ll earn 1.5% Annual Percentage Yield (APY) on your uninvested brokerage cash that is swept to the banks in our program, or 5% for Robinhood Gold members.*

For example, if you start January 1 at 2% APY with $1,000 in uninvested brokerage cash that is swept to a program bank, you could earn $20 by January of the following year. This includes compounding, assuming you don’t deposit, invest, or withdraw funds during the entire year.

Robinhood Gold is a subscription offering premium services available for a monthly fee.

You’re paid interest by the program banks monthly, and you can keep track of how much interest you’ve earned in the app in SettingsInvesting.

Could the interest rate change?

The brokerage cash sweep annual percentage yield (APY) paid by program banks minus fees paid to Robinhood is 1.5% as of August 11, 2022, or 5% for Robinhood Gold members as of Nov 15, 2023. The APY your cash earns is subject to change.

What could cause the rate to change?

In short, the Federal Reserve Bank (or “the Fed”) and market conditions are the biggest factors in APY fluctuations.

Congress assigns 3 main goals to the Fed: maximum sustainable employment, stable prices, and moderate long-term interest rates. The Fed uses various tools it uses to meet these goals, but interest-rate changes often get the most attention because they directly impact on how much interest you can earn and how much it costs to borrow.

When you opt your brokerage account into the brokerage cash sweep program, your money is held at one or more of the banks in our program. These banks pay interest rates that are determined in part by the federal funds rate, which moves up and down as mandated by the Fed. When the federal funds rate fluctuates, the rate you receive through the brokerage cash sweep may also change. This also means that the rate would go up if the Federal Reserve announces an increase to the federal funds rate. We'll announce these changes so you're aware before it happens.

Keep in mind, the impact of a fed funds rate decrease isn’t all bad. When the rate goes down, mortgage rates and other loan rates often do as well.

How does a rate change affect the interest I earn?

A rate change of 1% would mean that for every $1,000 held at the program banks for a year, you’d earn a difference of $10 in annual interest.

What balance do I earn interest on?

You earn interest on your uninvested brokerage cash that’s swept to the program banks. You only start earning interest once these banks receive your cash. This is affected by the timing of trades, deposits, or withdrawals.

For example, when you purchase a stock, the cash might not be taken out of your account until two business days after the trade settles. In this case, you would continue to earn interest during those two days, even if that cash is no longer available to spend.

The reverse is true as well—if you sell a stock, you may not get the cash until two days after the trade settles. In this case, you would only start earning interest on that cash after it settles and is swept to the program banks.

What’s uninvested brokerage cash?

Uninvested brokerage cash is any available cash that you have in your brokerage account that you have not yet invested or spent. This money is what is swept (or moved) to program banks where it starts to earn interest.

For those with a Robinhood Gold account, this doesn’t include margin.

You can find your swept cash balance in the app in SettingsInvestingCash sweep program.

Note

Customers that carry a margin debit balance would not earn interest through the cash sweep program because a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Additionally, if you’ve been flagged as a pattern day trader (PDT), you can still sign up for the brokerage cash sweep program, but you won't be eligible to earn interest until your PDT flag is removed.

You can find your swept cash balance in the Cash sweep program section within SettingsInvesting in the app.

Is there a minimum or maximum amount I can earn interest on?

No, you’ll start earning interest on your first cent. There’s also no maximum brokerage cash sweep balance that you can earn interest on, but cash deposited to these banks will only be covered by FDIC insurance coverage up to $2.25 million (up to $250,000 per program bank, inclusive of deposits you already hold at the bank in the same ownership capacity). If you opt out of one or more program banks, your FDIC insurance coverage may be reduced.

How is daily interest calculated?

Interest is accrued daily based on your end of day balance at the program banks. Your balance is multiplied by the daily interest rate, which is derived from the 1.5% annual percentage yield (APY), or 5% APY for Robinhood Gold members.

Example

At 3% APY* and $1,000 end of day balance, the daily interest accrual can be calculated as follows:

Daily interest rate = (1 + 0.03)^(1/365) - 1 = 0.008098629%

Daily interest accrual = $1,000 *0.008098629% = $0.081

This means someone with $1,000 would earn about $0.08 in interest that day. With daily compounding, the next day's interest would be calculated on a $1,000.08 balance, and assuming no deposits, changes to the uninvested cash balance, or withdrawals, the account could end the year with $1,030 at 3% APY.

For leap years, we would use the same formula as above for daily interest but divide by 366 days instead of 365.

Calculations provided are hypothetical and not guarantees of future results. Actual results will vary. Interest rates are subject to change.

Will my interest be compounded daily?

Yes, interest on your uninvested brokerage cash that is swept to the program banks will be compounded daily. Each day, you earn interest on your balance, and that earned interest itself also earns interest. Over time, your uninvested brokerage cash multiplies and grows on its own. Compound interest is a powerful tool to help build and accumulate wealth over time. Interest is paid on a monthly basis.

When do I get paid?

You’ll be paid interest once a month on the last business day of the month*, which will include interest through the end of the month. If the last day of the month falls on a non-business day, you will be prepaid interest for those days on the last business day.

For example, if the last day of the month is a Sunday, that month’s interest will be paid on the preceding Friday, along with what you would earn on Saturday and Sunday.

*In rare cases, you may be paid interest early. This can happen if you leave the program, if your cash moves to a different program bank (e.g. opting out of a bank), or if you make multiple transactions in your account in a short period of time.

Do I need to make purchases with my Robinhood Cash Card to earn interest on my money?

No, your Robinhood Cash Card and spending account are separate from your brokerage account. Although the spending account doesn’t earn interest, our brokerage cash sweep program allows Robinhood Gold members who opt in to earn 5% APY on uninvested brokerage cash that is swept to the banks in our program or 1.5% APY without Gold. That means you can put your money to work, even if you’re not currently investing it. Rates are subject to change.

Disclosures

The brokerage cash sweep is an added feature to your Robinhood Financial, LLC brokerage account. Robinhood Gold is offered through Robinhood Financial LLC. For more information, see the Robinhood Gold User Agreement.

Interest is earned on eligible uninvested cash swept from your brokerage account to program banks. Program banks pay interest on your swept cash, minus any fees paid to Robinhood. The Annual Percentage Yield (APY) is 1.5% as of August 11, 2022 or 5% for Robinhood Gold members as of Nov 15, 2023. The APY might change at any time at the program banks' discretion. Additionally, any fees Robinhood receives may vary and is subject to change. Neither Robinhood Financial LLC nor any of its affiliates are banks.

With the brokerage cash sweep program, the eligible uninvested cash in your brokerage account (cash intended for investing but that you have not yet invested or spent) is swept to program banks, where it becomes eligible for FDIC insurance up to $2.25 million or $250,000 per program bank, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. If you opt out of one or more program banks, your FDIC insurance coverage may be reduced.

Until funds are swept to a program bank, they're held in your brokerage account which is protected by SIPC. Once funds are swept to a program bank, they are no longer held in your brokerage account and are not protected by SIPC. However, these funds are eligible for FDIC insurance through the Program Banks subject to FDIC insurance coverage limits and any capacity limitations at the banks. Review the IND Disclosures for more information.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

© 2024 Robinhood. All rights reserved.