Robinhood Gold costs $5 per month and comes with a number of benefits, including (currently) 5% APY on uninvested cash, a 3% match on IRA contributions, and a handful of other benefits. A while back, Doctor of Credit reported a cool benefit I hadn’t realized: Gold members can access up to $1,000 a month via margin borrowing interest-free. I just noticed an update they did last month that some users can actually borrow up to $2,000 interest-free, and sure enough I see that capability in my own account. That might be of interest to some since one could at least theoretically pull that cash out and put it in a high-yield vehicle to come out ahead of the cost of Robinhood Gold.
The Deal
- Investment app Robinhood offers the ability to borrow up to $1K or $2K interest-free via a margin account for Gold members. The official Gold benefit is up to $1K interest-free, but some members are targeted for up to $2K interest-free.
Quick Thoughts
This looks like an easy way to access some capital in a pinch and/or to come out ahead of the Robinhood Gold fee. There are plenty of accounts that offer an opportunity to earn 5% APY or better these days, so if you’re targeted to be able to access $2K interest-free, it should be pretty easy to find a placer to park the money to earn more than $5 per month in interest.
I’m not sure how they determine who is targeted for the “up to $2K interest-free”. I have had margin enabled on my account for a long time and I have a regular taxable account that isn’t huge but isn’t just a few thousand dollars, either. My wife has a small taxable account with Robinhood and did not previously have margin investing enabled. When she enabled it, the app only showed that she’d get $1K interest-free as a Gold member.
I don’t know whether we’ll go to the trouble of withdrawing the $3K to put in a high-yield account, but at the very least it makes for a nice little buffer if we needed a little extra cash to float something for a month and we didn’t want to have to sell investments to free up more cash. I was contemplating moving some more investments into my wife’s account due to the current 1% match. Maybe if I did she’d get access to the $2K interest-free. The chance to borrow up to $4K interest-free for a couple could certainly be appealing for some.
Keep in mind that margin investing comes with risks, one of which is the risk of a margin call if the value of your investments drops. I expect that they’ve targeted the additional margin bandwidth to users with enough buffet to be unlike to face a margin call, but YMMV.
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