Robinhood Get Margin? How It Works & Costs

Yes, Robinhood offers margin trading, but only through its paid subscription tier, Robinhood Gold. With Gold, you can borrow against your investments to buy more securities, but you must maintain a minimum equity requirement or face a margin call. This article explains how Robinhood margin works, what it costs, and the risks involved.

Formula

The core margin formula calculates the buying power you get from your equity. The formula is:

Buying Power = Cash + (Securities Value × Margin Percentage)

Where:

• Cash = your available cash balance (in USD)
• Securities Value = the current market value of your marginable stocks/ETFs (in USD)
• Margin Percentage = the maximum loan-to-value ratio, typically 50% for stocks under Regulation T (as a decimal, 0.5)

For example, if you have $5,000 in cash and $10,000 in marginable securities, your buying power is $5,000 + ($10,000 × 0.5) = $10,000. That means you can buy up to $10,000 worth of additional securities, borrowing $5,000 against your existing holdings.

Worked Example

Let’s use the default values from the calculator above: finish time = 50 minutes, distance = 10 km.

Step 1: Convert the finish time to hours: 50 minutes ÷ 60 = 0.8333 hours.

Step 2: Calculate pace (min/km): 50 min ÷ 10 km = 5.0 min/km.

Step 3: Calculate speed (km/h): 10 km ÷ (50/60) hours = 10 ÷ 0.8333 = 12.00 km/h.

The calculator gives an average pace of 5.00 min/km and an average speed of 12.00 km/h. This is exactly what you’d expect for a 50-minute, 10-km run.

How Robinhood Margin Works

Robinhood Gold is a subscription service (currently $5 per month) that unlocks margin trading. With Gold, you get up to $1,000 of margin buying power instantly, and you can apply for more based on your account size and holdings. The margin is provided by Robinhood’s clearing firm, and you pay interest only on the amount you borrow, not on the total buying power.

Key features:

• You can borrow up to 50% of the value of your marginable securities (for stocks priced above $3).
• Margin is not available for all assets—cryptocurrencies, certain penny stocks, and some ETFs are not marginable.
• You can use margin to buy more stocks, ETFs, or options (though options have different margin rules).
• Your account must maintain a minimum equity of 30% (or higher for certain volatile stocks) to avoid a margin call.

Costs and Interest Rates

Robinhood charges margin interest daily on the borrowed amount. The rate is based on a tiered system tied to the Federal Funds Rate (the benchmark interest rate set by the Federal Reserve). As of 2024, the rate is roughly 7.5% to 8.5% APR for balances under $10,000, but it can be lower for larger balances. You can check the exact rate in your Robinhood app under Gold settings.

Important: Interest accrues daily and is charged monthly. Even if you borrow just $100, you’ll pay a few cents per day. Over a year, that can add up—borrowing $5,000 at 8% costs about $400 in interest.

How to Get Margin on Robinhood

To enable margin, you must:

1. Upgrade to Robinhood Gold (subscription fee applies).
2. Have a marginable account (standard taxable brokerage account, not an IRA).
3. Meet the minimum account value requirement—Robinhood doesn’t publicly state a fixed minimum, but you generally need at least $2,000 in equity to start trading on margin (per FINRA rules).
4. Apply for margin in the app: go to Account → Gold → Manage Margin, and follow the prompts.

Once approved, you’ll see “Margin� as an option when placing trades. You can choose to use margin or not for each order.

Common Problems and Risks

The biggest risk is a margin call. If your account equity falls below the maintenance requirement (typically 30% for stocks), Robinhood will issue a margin call, requiring you to deposit cash or sell securities to bring equity back up. If you don’t act, Robinhood can liquidate your positions without notice, potentially locking in losses.

Another issue is volatility. Margin amplifies gains and losses. If your stock drops 10%, you lose 10% of your own money, but if you used 2:1 leverage, you lose 20% of your equity. In extreme cases, you could owe more than your account value (negative balance).

Also, margin is not available for all assets. For example, you can’t use margin to buy cryptocurrencies on Robinhood (they’re not marginable). And some ETFs have higher margin requirements (e.g., leveraged ETFs may require 50% or more).

Comparison: Robinhood vs. Other Brokers

Robinhood’s margin is competitive but not unique. Many brokers offer margin at similar rates, but Robinhood’s flat $5/month Gold fee is unusual—most brokers charge no monthly fee but set higher minimum balances. For example, Fidelity and Charles Schwab offer margin with no monthly fee, but they require a minimum of $2,000 and have similar interest rates. Interactive Brokers offers lower rates for large balances but has a more complex fee structure.

Robinhood’s advantage is simplicity—it’s easy to enable and manage in the app. The downside is the monthly fee, which you pay even if you don’t use margin. If you only occasionally use margin, you might be better off with a no-fee broker.

Safety and Best Practices

Margin trading is risky. Here are some guidelines:

• Never borrow more than you can afford to lose.
• Keep a buffer above the maintenance requirement—don’t use 100% of your buying power.
• Monitor your account regularly, especially during market volatility.
• Understand that margin calls can force you to sell at the worst time.
• Consider using limit orders and stop-losses to manage risk.

Also, note that Robinhood does not offer margin on IRAs (retirement accounts). Margin is only for taxable brokerage accounts.

Frequently Asked Questions

Do I need Robinhood Gold to use margin?

Yes, margin trading is a feature of Robinhood Gold. Without Gold, you cannot borrow against your securities. The Gold subscription costs $5 per month, but you can cancel anytime.

What is the minimum account balance for margin?

FINRA requires a minimum of $2,000 in equity to open a margin account. Robinhood also requires you to have a taxable brokerage account (not an IRA). However, you can start with as little as $2,000, but you’ll have limited buying power.

Can I use margin to buy crypto?

No, Robinhood does not allow margin trading on cryptocurrencies. You can only use margin for stocks and ETFs that are marginable.

What happens if I get a margin call?

If your equity falls below the maintenance requirement, Robinhood will notify you via email and push notification. You have a limited time (usually a few days) to deposit cash or sell securities. If you don’t, Robinhood may liquidate positions to bring your account back to compliance.

Are there any fees besides interest?

Besides the $5/month Gold subscription, Robinhood charges no commission on stock trades, but you do pay interest on the borrowed amount. There are no other hidden fees for margin, but you may incur fees for options or other products.

Can I turn off margin?

Yes, you can disable margin trading in the app by contacting Robinhood support or adjusting your account settings. However, if you have an outstanding margin loan, you’ll need to repay it first.

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in t | Finish time | min | 50 | 0
in d | Distance | km | 10 | 0
out pace | Average pace | min/km | t / d | 2
out speed | Average speed | km/h | d / (t / 60) | 2