How to Close a Robinhood Account: A Detailed Guide
Robinhood is one of the most popular online brokers and largest fintech companies in the US, offering high-interest savings accounts, a 1% contribution match on IRA, and zero-commission brokerage services.
Despite all the benefits, you may reach a point where you no longer wish to use the platform. Whether you’re planning on switching to another platform, want to consolidate your brokerage accounts, or just need a break from trading altogether, here is a step-by-step guide on how to close your Robinhood account.
Before You Close Your Robinhood Account
Closing your Robinhood account is a simple process and can be done right in the app.
However, before you proceed to close the account, you first need to bring your account balance to $0. In other words, you have to empty the account and either
- Sell all current assets, close all positions, and withdraw the funds
- Transfer all the assets to another brokerage
It is important that you decide this before closing the account because the process involved is different.
Which option is better?
Selling all your marketable securities comes with certain risks. For one, you risk losing money since you might be forced to sell the assets for less than their actual value. You will also be liable for paying capital gains tax.
Switching to another broker is usually a better option. This way, you can continue trading or earning interest on your assets. Plus, if you transfer to a broker that offers more investment products, you will get more chances to diversify your portfolio.
How to deactivate your Robinhood account
These are the steps to follow
1. Open the Robinhood app
2. Select the Account icon from the menu
3. Click on Settings
4. Tap on Account Information
5. Scroll down and click on Deactivate Your Account
The app will provide you with the steps required to close all your positions and withdraw your balance to your bank account. Once your account balance is zero, the account will be automatically closed.
To access all your documentation, such as account statements, tax papers, and trade confirmations, you will need to download the app again. This is not a reactivation process, so you can get your documents even if your account is closed.
How to transfer your Robinhood account to another brokerage
Moving your account to another broker is a hassle-free process. This is what you need to do:
1. Ask the other brokerage to initiate the transfer. Make sure you ask for an ACATS (Automated Customer Account Transfer Service) transfer as this is the only asset transfer method accepted
2. The outside broker might need your RHS number. You can find it in the app by tapping on Account → Investing.
3. The broker will submit the transfer instruction to Robinhood’s clearing firm, Robinhood Securities (RHS)
4. RHS will follow the instructions and move all your assets
Once the procedure is done, your Robinhood account will automatically close.
Note: If you are using margin, talk to your new broker as not all online trading platforms accept leveraged accounts.
How much does it cost to close a Robinhood account?
If you sell your shares and transfer the money to your bank account, you’ll not be charged any fees. However, if you decide to move your holdings to another broker, you will have to pay a $100 fee. If you don’t have enough cash or assets to cover the bill, the charge will be transferred to your new broker.
How long does it take to close a Robinhood account?
Robinhood estimates that it may take anywhere from three to five business days to close your account. This is after you requested the deactivation of your account and brought your balance to $0.