Robinhood Introduces Lower Margin Rates, Targets More Advanced Investors

Robinhood has introduced new, lower margin rates that it said are the lowest among leading brokerages.

The rates vary based on the customer’s total margin balance and range from 5.7% to 6.75%, the online brokerage said in a Tuesday (May 21) press release.

Six rates are offered in this tiered margin structure, ranging from 5.7% on margin balances of $50 million or more to 6.75% on margin balances of up to $50,000, according to the release.

“We’re always looking to upend the status quo on behalf of our customers,” Steve Quirk, chief brokerage officer at Robinhood, said in the release. “Whether someone has a balance of a few thousand dollars, or millions, they automatically have access to the lowest margin rates among leading brokerages with absolutely no haggling required.”

These new, lower rates come at a time when Robinhood is expanding its platform to provide better tools for more advanced investors, according to the release.

They are part of an effort to provide approaches to margin investing that meet the needs, investment experience and financial goals of a variety of customers, the release said.

Each customer’s rate is applied automatically, based on the margin balance of their account, eliminating the need to negotiate a rate, per the release.

“As customers consolidate their finances from other brokerages into Robinhood, they can take advantage of our new margin rate structure to access better rates and even more buying power,” the company said in the release.

For subscribers to the Robinhood Gold membership program, the company also offers the first $1,000 of margin with no interest, according to the release. It will also soon offer subscribers a 1% unlimited deposit boost on eligible incoming brokerage deposits.

It was reported on May 8 that Robinhood has experienced strong trading activity in equities and options.

The firm has also seen retail traders reenter the market, with a 59% increase in transaction-based revenue in the first quarter. Retailer traders have been encouraged by hopes of a soft landing of the economy.

In another recent move, the company launched a credit card in March, saying it aims to reimagine the credit card experience and make it easier for people to monitor how they spend their money.