How to Close a Robinhood Account
Posted by Frank Gogol in Financial Apps | Updated on June 19, 2023
As a broker-dealer for the individual trader, Robinhood has taken the millennial investor market by storm. It is a smartphone-first brokerage, allowing easy access to a trading platform for retail traders. With competitive pricing, including $0 commission, and access to ETF, options, and cryptocurrency trades in the U.S. and Australia, it’s easy to see why its user base has grown dramatically in the past four years. Robinhood has even shown growth despite the Coronavirus pandemic.
However, easy-to-access trading platforms are not without their controversy. Recent news stories highlight a range of complaints aimed at Robinhood. This might explain an uptake in searches for how to close a Robinhood account.
Reasons Why You Might Want to Close Your Robinhood Account
There are three broad categories of complaints against Robinhood that might explain why you want to know how to close a Robinhood account:
You want to do more day trading
Robinhood makes trading easy by providing a trading platform without bells and whistles. You can only trade stocks, ETFs, and options, eliminating many of the advanced day trade platforms and tools. If you want to try your hand at day trading, you might want to close your Robinhood account.
You want less risky, more traditional brokerages
Robinhood makes it easy to trade as an individual, retail trader. This means you are completely responsible for your investment strategy — you do not have a broker or financial advisor in the Robinhood ecosystem that can give you individual advice. If you do not know what you are doing, you can lose a lot of money. If you want to transfer your account to a more traditional, institutional investment broker, you might want to close your Robinhood account.
You want more risky, less traditional brokerages
By taking the unprecedented step of blocking its users from buying certain stocks in early 2021, Robinhood alienated a large part of its customer base. Retail investors who were using Robinhood as a way of getting away from traditional, institutional brokerages saw this move as “stealing from the poor to give to the rich”. If you want to transfer your account to a stock trading app that has not blocked its users from buying these stocks, you might want to close your Robinhood account.
Steps to Take Before Closing Closing Your Account
First, you need to decide whether you want to close your account, or just deactivate it. If you close your account, the only thing you will be able to use the Robinhood app for is checking your historical account statements, tax documents, and trade confirmations.
If you later decide you want to trade using Robinhood again, you will have to redo the application process. If you deactivate your account, you will still be able to check all of your documentation. You don’t have to leave any funds in your account. However, you will be able to easily reactivate your account if you want to resume trading on the app at a later time.
Whether you choose to close or deactivate your account, your Robinhood account balance has to be $0. This means you have to either sell all of your positions and withdraw the balance to your bank account, or you have to transfer all of your assets from Robinhood to another brokerage.
How to Close a Robinhood Account
If you choose to sell all of your positions and withdraw the balance to your bank account, you can close your Robinhood account in the app itself.
How to close a Robinhood account:
- Tap the Account (person) icon
- Tap Account Information
- Scroll and tap Deactivate Account
- Follow the steps to close all your positions and withdraw your outstanding balance
- Once your balance is $0.00 and your positions are closed, you will be able to confirm your deactivation request
- If you want to close your account, email a written request to Robinhood ([email protected]).
Once these steps are completed, your account will be restricted from investing or trading. Re-downloading the app will not reactivate your account. Because Robinhood is required by law to preserve certain books and records, your account will still exist in the Robinhood system, and you will still be able to access your account statements, tax documents, and trade confirmations in the app.
How to Transfer My Robinhood Account to Another Broker?
If you do not want to sell your positions, you can choose to transfer them to another brokerage instead. If all of your assets are transferred out, Robinhood will automatically close your account.
The transfer process begins at your newly chosen brokerage firm. You will have to initiate an ACATS (Automated Customer Account Transfer Service) request and fill out any paperwork your new brokerage firm requires. Thereafter they will submit transfer instructions so your assets and funds can be moved to the new brokerage firm.
You might need to give the other brokerage your Robinhood Securities (RHS) account number. You can find this information in your mobile app:
- Tap the Account icon in the bottom right corner
- Tap Investing
- Your account number will be at the top of your screen.
You might also need to reference a DTC number for your transfer. Robinhood’s DTC number is 6769.
If you need assistance during the account transfer process, you can call the Robinhood customer service line at 1-650-940-2700.
Does Robinhood Have a Cancellation Fee?
Robinhood does not charge account closure fees on any of its accounts. However, closing your Robinhood account will still cost you money.
If you choose to sell your positions, Robinhood doesn’t charge commissions, which is a bonus. However, like most brokerages, Robinhood will pass the SEC and FINRA sales charges on to you. Also, selling your positions might affect your capital gains tax position.
If you choose to transfer your positions to a different brokerage, you will also pay fees. While transferring your trading account to Robinhood costs nothing, you will need to pay $75 to transfer to another brokerage. This can sometimes be offset by brokerage firms who offer incentives for you to transfer your positions to them.
Whatever the reason you want to leave the Robinhood trading platform, finding out how to close a Robinhood account is straightforward.
On the app, you can choose the Deactivate Account option, and it will prompt you to sell all of your trading positions and transfer your account balance to your bank account. If you do not want to sell your trading positions, you will need to initiate an automated customer account transfer service request to transfer your Robinhood data to a new brokerage. Although Robinhood does not charge an account closure fee, remember either option will have some financial cost to you as the user.