Unsettled Funds On Robinhood – 7 Things To Know


It is fair to say that Robinhood has transformed the investing world and made financial markets accessible to everyone. They were the first to offer commission-free trading in the stock market. With more investors entering the market than ever, you might have heard about unsettled funds on Robinhood.

The General Meaning Of Unsettled Funds

Did you ever think about what actually happens with your money when you make a transaction of some kind?


Most of the time, it does not magically appear on the other side. While sometimes the services we use give that impression, it usually takes time until the transaction has passed all the necessary stages. Not rarely are we talking about a few business days here.

You speak of unsettled funds on Robinhood if they have not yet passed all those stages.

Settlement Of Bank Transactions

As a Robinhood user, you can issue bank transactions. Every time you issue a bank deposit or withdrawal, a bank transaction occurs.


Once your transaction is issued in your brokerage account, it flows through the settlement process. After a waiting period of 4-5 trading days, your full amount of money will show up on the other side.

The end date of that settlement date is also called the settlement date.

Instant Deposit allows you to access your unsettled funds on Robinhood right after initiating bank deposits. You can immediately use the money for stock purchases.


The maximum amount of money you can instantly access depends on your specific account. It can increase or decrease over time.

Your account balance in Robinhood will immediately include your deposited money if it is covered by your Instant Deposit amount. This feature makes bank deposits feel like an instant settlement.

Make sure your bank account is sufficiently funded when using Instant Deposit, as Robinhood provides access on a good faith basis. A good faith violation can put your account in restrictions.

Settlement Of Stock Sales

The same concept of settlement also occurs when you sell stocks, mutual funds, ETFs (Exchange-Traded Funds), or any other security on the Robinhood app.

It takes 2 trading days for equity sales and 1 day for option sales until you can use the money.

The Securities and Exchange Commission (SEC) regulates brokerage services like Robinhood.
In March 2017, they defined the standard settlement cycle as “T+2”. On February 15, 2023, the settlement time was shortened to “T+1” (1 day) (source).

Settlement periods are defined in Rule 15c6-1(a) under the Securities Exchange Act. They allow buyers and sellers to execute all the necessary steps to facilitate the transfer.

Cash Accounts Vs. Margin Accounts

Your account type can be a Robinhood Cash Account or a Robinhood Margin Account. Each of them comes with different limitations and capabilities when it comes to fund settlement.

With A cash account, you can’t use your unsettled funds. You must wait until they are settled before you can use the money.

Conversely, margin accounts on Robinhood allow you to instantly use funds from unsettled stock sales.

Usage of Unsettled Funds On Robinhood

The only way to use unsettled funds on the Robinhood platform is by using a margin account.

These Robinhood account types are usually for more experienced investors as they come at higher risk due to more buying power. You can access advanced trading forms such as short selling, day trading, and more complex options strategies with margin accounts.

Benefits of Robinhood Gold Subscription

Robinhood offers a subscription called Robinhood Gold. One of the benefits of this subscription is an increased amount of Instant Deposit available to you.

Another benefit of gold accounts is the interest (5% at the time of writing) you can earn on uninvested cash in your account through Cash Sweep. Note that you will only earn interest on cash that has been fully settled after you initiate a transfer.

Uninvested cash that earns interest through the Cash Sweep program on these banks is FDIC insured up to $2.25 million. The higher total is because of the use of multiple banks, each providing an FDIC insurance of $250,000. If your money exceeds the FDIC insured amount of one bank, it will automatically split into the next one.

What About Cryptocurrency Trading

Robinhood is, of course, not only used for stock trading. If your risk tolerance allows it, you can also trade cryptocurrencies.

Trading cryptocurrencies on Robinhood Crypto does not go through the same kind of settlement periods. The rules provided by the Security and Exchange Commission around the settlement time do not apply to cryptocurrencies.

Since cryptocurrency trading is a relatively new thing, the rules for that will surely change over time. If you are trading cryptocurrencies, ensure you are up-to-date with the cryptocurrency environment.

The IRS has released some guidelines around cryptocurrencies:

Final Thoughts – Unsettled Funds On Robinhood

Investing and growing your money in the financial market is an exciting endeavor, and Robinhood has allowed many more investors to start their journey on Wall Street.

In this post, you have learned what unsettled Robinhood funds mean in multiple contexts. You’ve also learned about some of the benefits a Robinhood Gold Account can provide you with. We furthermore touched on some of the SEC regulations involved.

Lastly, I’ve taken a closer look at the cryptocurrency trading world and the rules involved.

I hope that you have learned everything you’ve been curious about. Please let me know in the comments below if you have any outstanding questions.

Disclaimer: The information in this blog post should not be considered investment advice or a replacement. They are solely provided for informational purposes. Any investment of money comes with a significant risk. Please consult with a financial advisor for any specific questions on your financial situation.

Finding a good financial advisor is not easy. I recommend the Garrett Planning Network, the National Association of Personal Financial Advisors (NAPFA), and the XY Planning Network. These networks can get you in contact with a fee-only advisor. No matter how much money we are talking about, it will not change your costs.

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