Backup coverage | Robinhood

Backup coverage

Before you begin

To sign up for backup coverage, you must have both a Robinhood spending account and a Robinhood brokerage account. Backup coverage doesn’t cover Non-originated ACH (NOA) withdrawals and isn’t bank overdraft protection.

Backup coverage is designed to transfer available funds from your Robinhood brokerage account into your Robinhood spending account to cover a debit card purchase, an ATM withdrawal, or a cash back request.

Example

Let’s say you make a debit card purchase for $100 and you only have $40 cash in your spending account. Assuming your brokerage account has cash available to cover it, the remaining $60 will be automatically transferred from it to cover and complete the transaction.

How do I get backup coverage?

To back up your Robinhood spending account, you can set up backup coverage to automatically transfer money from your Robinhood brokerage account to complete a transaction.

If you are establishing a new Robinhood spending account, you’ll be prompted to enable Backup coverage during the account opening process. Otherwise, follow the steps in How do I turn it on or off.

Are there fees?

No, backup coverage is free.

How do I turn it on or off?

You can turn backup coverage on or off at any time for your brokerage account in the app:

  1. Select Account (person icon) → Menu (3 bars) or Settings (gear)
  2. Select SpendingBackup coverage
  3. Switch the toggle On or Off
Note

You currently can’t turn backup coverage on or off on the web.

Why did I get multiple backup coverage transfers?

If a transfer settles higher than expected, like for tips on card transactions, the total transaction might require multiple backup coverage transfers from your brokerage account to your spending account.

Example

Let’s say you paid a restaurant $100 for dinner with a $20 tip, but your spending account only has $50 in cash. The first backup coverage transaction will show for the initial $50 in History and statements, and then when the transaction is settled, you might see a second backup coverage transaction for the additional $20 tip.

Why didn’t my transaction go through with backup coverage turned on?

Your transaction might be declined even with backup coverage turned on for the following reasons:

  • Something other than a debit card purchase, an ATM withdrawal, or a cash back request, such as an NOA withdrawal, including third-party transactions like direct deposits from your bank, payroll, or Venmo.
  • You reached your spending limit, which is the same as the current limits for your spending account.
  • If your brokerage account doesn’t have enough money to cover the transaction.
What is a partial approval?

A partial approval is when the merchant allows for multiple forms of payment for a single transaction. Partial approval eligibility is determined by the merchants, and not by Robinhood.

Backup coverage is turned on for partial approval transactions when you have multiple available account balances in both your spending and brokerage accounts with Robinhood. For example, if your spending account has insufficient funds, your brokerage cash will be used for the purchase. If your brokerage cash is exhausted and can't cover the balance, the merchant will ask you for another card or form of payment for the remaining balance owed.

Example

For a $100 transaction, let’s say your spending account only has a $20 balance available, then backup coverage will pull your available brokerage cash from your brokerage account. If that account only has $40 available, the merchant will authorize $60 for approval. Then the merchant will ask for a second form of payment for the remaining $40, such as from another debit or credit card.

Will it pull from margin?

No, backup coverage won't pull from available margin within your brokerage account for users with margin investing enabled. It will only pull from your uninvested brokerage cash. If all uninvested brokerage cash is exhausted, then your card transaction will be declined.

What will happen with recurring investments?

If you have recurring investments set up in your brokerage account, you can still use backup coverage.

Keep in mind, both your recurring investments and backup coverage use the same uninvested brokerage cash. If you’re regularly using backup coverage to fund your debit card, ATM withdrawal, or cash back transactions, your available brokerage cash can be exhausted. If you have a recurring investment set up but don’t have enough brokerage cash for it, that investment will be skipped.

Can it affect the brokerage sweep program?

If you’ve opted in to the brokerage cash sweep program, backup coverage may affect the amount of interest you earn. This is because backup coverage uses your uninvested brokerage cash to cover what’s in your spending account, which funds your debit card, ATM withdrawal, or cash back transactions.

Will I be eligible for round-ups?

If you don’t have enough cash in your spending account when a transaction is completed, round-ups won’t be credited.

Where can I find my transfer history?

You can find Backup coverage transfer history in the following:

How do I fund my spending account?
  • Link a bank account: The money shows as pending on Cash until it clears in 4-5 business days. We’ll notify you when the money is available to spend.
  • Set up direct deposit: You can have your paycheck or government deposits (like tax refunds) deposited directly into your spending account.
  • Use your ACH account and routing numbers: The ACH account number is your spending account number with a prefix. The routing number identifies the financial institution. You can find your ACH account and routing numbers in your app in Account (person) → Menu (3 bars) or Settings (gear) → Transfer.

For more information, check out Transfers.

Disclosures

ATM fees and other fees may apply.

Margin investing, offered through Robinhood Financial, involves the risk of greater investment losses. Before using margin, customers must determine whether this type of strategy is right for them given their investment objectives and risk tolerance. Subject to eligibility requirements.

The brokerage cash sweep program is an added feature to your Robinhood Financial LLC brokerage account. Interest is earned on uninvested cash swept from your brokerage account to program banks. Program banks pay interest on your swept cash, minus any fees paid to Robinhood.

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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.

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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.