How to Delete Robinhood Account

Is Robinhood luring young traders with their $0 commissions and unimaginable leverage? From Richard Dobatse, who lost $860,000 in March and Alex Keans, who took his life due to astronomical losses, Robinhood is not without controversy. Are you wondering if or how you can delete your Robinhood account?  Are you ready to finally move to a well established broker like TradeStation and get a $1000 rebate? 

If you're strictly more of a mobile trader, you might like Cash App too. 

The short answer is: Sure, you can deactivate it but it's not quite deleting it. The longer answer is… the rest of this article.

Did you know that you can transfer your account or simply close it? Luckily, the steps involved aren't that complicated, and won't take much time.

We will show you exactly how to delete your Robinhood account and give you a few different brokerages to consider.

How to Delete Robinhood Account

  • Do you know how to delete your Robinhood account? If you want to move to a different broker, or cash out and stop trading all together, you need to close your account. As a result, how can you do that? Read more to find out. 

1. Robinhood Overview

How to Delete Robinhood Account

Founded in 2013, Robinhood is a discount US broker-dealer app that has taken the world by storm. It has grown from 1 million users from just four years ago, to 10 million at the start of this year! The main reason: $0 stock, ETF, options, and cryptocurrency trades to clients in the US and Australia.

Robinhood is geared mainly towards millennial investors who want a smartphone-based trading platform without any bells and whistles.

It has been a smartphone-first brokerage, with Android and iPhone apps as the primary methods to log into your account and place trades. 

2. How Does Robinhood Make Money?

Robinhood charges zero commission for US stock, options, and cryptocurrency trading, so how do they make money? Robinhood makes money through a complex practice known as "payment for order flow."

In its basic form, every time a Robinhood customer places a trade, Wall Street firms buy or either sell the shares first. It is these firms who then determine what price the customer gets.  

I hasten to add; these firms pay Robinhood for the right to do this. Mainly they're engaging in a form of arbitrage by trying to buy or sell the stock for a profit over what the Robinhood customer gets.

Surprisingly, this practice isn't new; common retail brokers like E-Trade and Schwab do it as well.

Basically, they get paid more if you trade more.  

3. Top Reasons Why People Want to Delete Their Robinhood Account

  • Less than stellar trading platform for stocks. Robinhood has no advanced trading platform or tools (think hotkeys); this makes it virtually impossible to day trade stocks.
  • You can only trade stocks, ETFs, and options.
  • Risks of trading through their app is compounded due to numerous software glitches over the years. 
  • In 2018, Robinhood released software that mistakenly reversed the direction of options trades, giving customers the opposite outcome from what they expected.
  • In 2019 they mistakenly allowed people to borrow an infinite amount of money to multiply their bets. This was a dark day for those who didn't have proper risk management strategies in place.  
  •  A complete blackout of their site for two days in March 2020 frustrated many. Then again several times later

4. A Black March for Robinhood

In March 2020, Robinhood went completely down. You couldn't see your statement, account, anything. Even the main website is down.

In March, the site crashed for almost two days, due to the COVID-19 volatility. During this time, Robinhood's customers were unable to make trades to offset the damage to their accounts. Recently they started restricting people from trading certain stocks because they were too volatile...They know what's best for you right?

What Happens When You Deactivate Your Robinhood Account?

  • When you deactivate your Robinhood account, you'll still be able to access important documents needed. For example, tax documents and accounts statements. But you won't be able to trade once you've deleted your account.

1. Is There a Cancellation Fee When I Delete My Robinhood Account?

Luckily, Robinhood does not charge account closure fees for either their joint or individual brokerage accounts. Are there fees if I close my Robinhood IRA? Nope.

2. How to Transfer My Robinhood Account to Another Broker?

If you're a person who likes to keep their options open, why don't you consider transferring your stocks or other securities to another broker? That way, if you decide to go back to Robinhood, you save yourself the hassle of re-opening an account. 

Let's make it clear upfront: Transferring your Robinhood account to another broker will cost you money. While transferring your trading account to Robinhood costs nothing, you will need to pay $75 to go in the other direction.

No shocker there. Worse yet, this $75 fee is above average by industry standards. For starters, Ally Invest only charges you $50 to transfer out your account, while TD Ameritrade charges nothing.

Props once again to TD Ameritrade, owners of one of our favorite charting platforms, Thinkorswim. 

3. Filling Out an Automated Customer Account Transfer Service (ACAT) Request

To start the transfer out process, you actually don't need to do anything at Robinhood. In fact, the process begins at your newly chosen brokerage firm.

Plus, you can do it from the comfort of your home! Most brokerages have an on-line form you simply fill out and boom, an automated system moves your account electronically.

Throughout this process, keep your Robinhood account number handy as your new brokerage firm will request it.

Even better, free money! A majority of brokerage firms offer incentives for you to transfer your brokerage to them. How great is that? Like any sign-up incentive, you start by clicking on their promotion link and follow the steps. One vital point to keep in mind is that you specify that your new account will be funded by an account transfer (this is the ACAT), from another brokerage. In this case, the brokerage is Robinhood. 

 Prior to all this, decide if you're transferring your entire account or just particular securities. An important point often overlooked is that your Robinhood account can't be moved into a different account type. A classic example would be a joint account; you can't transfer it into a trust because that's a different account type. 

All in all, this process takes about one or two weeks, depending on your new brokerage firm!

For whatever reason you need assistance during the account transfer process, you can call Robinhood. During regular working hours, they have a customer service line you can call at 1-650-940-2700.

4. To Summarize, Take These Steps to Transfer Your Account

  1. Pick a new brokerage firm
  2. Decide if you're transferring your entire or just a portion of your account
  3. Fill out the ACAT form
  4. Pay the $75 fee to Robinhood
  5. Wait for approximately one to two weeks for your new brokerage account to be approved
  6. Join Bullish Bears so you can learn how to trade 😉

How to Delete Your Robinhood Account

  • If you're still reading, chances are you want to delete your account entirely, and that ok too. Having said that, Robinhood has made it quite easy for you to close your account. But, there are a few requirements to be aware of. 

First off, your account balance must be $0. To do so, you either transfer your account to a new firm or sell everything and put the funds in your bank account.

Like I mentioned earlier, if you do decide to sell, Robinhood doesn't charge commissions, which is a bonus. However, like most brokerages, Robinhood does pass on the SEC and FINRA sales charges.

Finally, fire up your email and submit a written request to Robinhood ([email protected]) to close your account. The written request step is a MUST! Once this is complete, a representative will reach out within five business days. Your account will be restricted from investing or trading. but it will still exist in their system according to reports we are getting from former Robinhood users who have attempted to delete their accounts.

1. Steps to Take Before Closing (Deactivating) Your Account

  • Sell all your positions
  • Withdraw the balance back to your bank account

or

  • Submit a request to another brokerage to have your assets transferred out of Robinhood. Once completed, Robinhood will close your account for you.

2. Robinhood Alternatives

Before deleting your Robinhood account, you need to open another brokerage account to continue to trade. Which begs the question: Who are the best alternatives to Robinhood? Luckily, Changing brokers isn't that difficult; here are several low-cost brokerages to choose from!

In my opinion, your best bests include Firstrade, M1 Finance, WeBull, AllyInvest, and TD Ameritrade. All of these brokerage companies provide low-cost trading plus a host of benefits that Robinhood doesn't offer. Indirectly, Robinhood is competing with Robo-advisors like Betterment and Wealthfront.

3. A Wording of Warning: Understanding Options Risk and Margin

His family woke to a sticky note on 20-year old Alex Kearns' door, "If you're reading this, then I am dead." His body was found a few days later; cause of death: suicide.

The brand new trader, assigned $1 million dollars worth of leverage from Robinhood "thought" he lost $730,165. He claimed the puts he bought and the shares sold "should have cancelled out," but in hindsight, he said he had "no clue" what he was doing.  

How to Delete Robinhood Account

But sadly, he may have misunderstood the financial statement from Robinhood. Alex was trading in options, and little did he know that negative buying power and negative cash are not the same as typical debt.

Moreover, the $730,000 likely was a reflection of the other side of the options trade - the side not settled yet and the underlying value of the stocks tied to those options. 

Our Parting Thoughts

Alex's' death underscores the risk that comes with complicated financial instruments like options if you don't know what you're doing. For this reason alone, you must take the time to educate yourself before you ever put money on the table. 

Be cautions with the course provider you pick as some encourage people to go from training wheels to driving motorcycles in one week. Stock trading is not a race and you need to follow the one percent rule all all times to protect your account. 

Remember, patience equals profits. 

If you or someone you know is in crisis, call the National Suicide Prevention Lifeline at 800-273-8255

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