With margin investing disabled, why do I have an account deficit?
If you're using the margin investing feature, check out I have margin investing enabled. Why do I have an account deficit?
You have an account deficit because you’ve used more buying power than you had available. Several things can cause you to have an account deficit, including ACH reversals after using Instant Deposits, fees, and cases when you’re assigned early on an options spread or in certain option exercise scenarios.
By default, you'll receive instant access to $1,000 of deposits made. If you're subscribed to Robinhood Gold, then you can access at least $5,000 in Instant Deposits and up to $50,000 in Instant Deposits in your brokerage account.
If you spend some or all of your Instant Deposits and your scheduled ACH transfer is canceled (your transfer is reversed), the amount of the reversed deposits will be deducted from your buying power, potentially causing you to have an account deficit.
To learn more about how you can avoid reversals, check out How to prevent bank transfer reversals.
If you're charged a fee and you don’t have enough brokerage cash in your account to cover it, you may have an account deficit. Some of the most common fees that cause customers to have an account deficit are Robinhood Gold fees and fees associated with American Depositary Receipts (ADRs). You can find all of your past Robinhood Gold fees and interest payments in the app in History. Additionally, you can find information about your next Gold billing cycle in the Account Overview. Check out our fee schedule to learn more.
For more information about exercises and assignments, check out Expiration, exercise, and assignment.
If you’re trading an options spread, your long leg should cover your short leg. However, you may have an account deficit if the short leg of your options spread is assigned prior to the expiration date. When you’re assigned early on a short leg in general, before you exercise the long leg of your spread, your buying power will decrease and you may have an account deficit. This is because the positions you hold are used to calculate your buying power, and at that time, the shares (for call spreads) or buying power (for put spreads) are needed to cover the deficit in your account. If your long leg is in-the-money and you would like to exercise, you can either do so in your app or contact us so we can help do it for you. You can also experience an account deficit when your long leg is exercised in anticipation of your short leg being assigned. Generally, if the short leg assignment is processed in the account, the deficit will be covered.
An account deficit due to early assignment might result in a margin call. In these cases, Robinhood is likely to take action to cover your position for you.
You can resolve an account deficit by depositing funds or closing positions.
All investments involve risk including loss of principal. No investments are FDIC insured. All examples are hypothetical and don’t reflect actual or anticipated results. Content is provided for informational purposes only; it doesn’t constitute investment advice and isn’t a recommendation for any security, account type or feature, or trading strategy. Past performance doesn’t guarantee future results.
Options trading entails significant risk and isn’t appropriate for all investors. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Customers should consider their investment objectives and risks carefully before investing in options. Supporting documentation for any claims, if applicable, will be furnished upon request.
Margin investing involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation.
Regardless of the underlying value of the securities you purchased, you must repay your margin debt. Robinhood Financial can change its maintenance margin requirements at any time without prior notice. If the equity in your account falls below the minimum maintenance requirements (varies according to the security), you’ll have to deposit additional cash or acceptable collateral. If you fail to meet your minimums, Robinhood Financial may be forced to sell some or all of your securities, with or without your prior approval.
Robinhood Financial charges a standard margin interest rate of 12% and a margin interest rate of 8% for customers who subscribe to Gold. The margin interest rate is calculated by adding 6.5% (for non-Gold customers) or 2.5% (for Gold customers) to the upper bound of the Target Federal Funds Rate, which is set by the Federal Reserve and is subject to change without notice. The formulas used to calculate the margin interest rate are subject to change at Robinhood Financial’s discretion. The margin rates shown are as of July 27, 2023 and might change at any time without notice and at Robinhood Financial’s discretion.
For more information, review FINRA’s Investor Alert and Robinhood Financial’s Customer Relationship Summary, Margin Disclosure Statement, and Margin Agreement. These disclosures contain important information on Robinhood Financial’s products and services, conflicts of interests, lending policies, interest charges, and the risks associated with margin investing enabled accounts.
Crypto trading and custodial services are offered through an account with Robinhood Crypto. Robinhood Crypto isn’t a member of SIPC or FINRA. Robinhood Crypto and Robinhood Financial are separate but affiliated entities. Crypto aren’t securities and your crypto isn’t FDIC insured or SIPC protected. For more information, review the Robinhood Crypto Risk Disclosure.
Robinhood Financial LLC (member SIPC), is a registered broker dealer. Robinhood Securities, LLC (member SIPC) is a registered broker-dealer and provides brokerage clearing services. Robinhood Crypto, LLC provides crypto trading. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’), trading as HOOD on Nasdaq.