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What are Unsettled Funds in Robinhood? How to withdraw them?

Founded in 2013 Robinhood is an American financial service firm that has quickly become one of the most reliable platforms on the internet where users can easily buy and sell stocks and crypto from the comfort of their houses.

Features like 0% commission on buying and selling stocks or 4% in the case of crypto plus the lowest investment cap of $1 for buying stocks to promote trading among beginner investors are the main reasons for its quick fame.

Nonetheless, there remain some doubts in the minds of traders about the division of their funds on the platform. In this article, we have attempted to clear any outstanding doubt about unsettled funds on Robinhood.

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What are unsettled funds in Robinhood?

If you have recently started with Robinhood investing then sooner or later you will come across an unsettled funds message on the platform.

The unsettled funds are nothing more than a pending transaction on your Robinhood account. That is to say, the unsettled fund is the money that you have recently transferred to your Robinhood wallet or the money earned by selling stocks from your trading account.

And just like every other pending transaction the unsettled funds will eventually be settled on your account in standard 2-3 working days.

It’s common to have some unsettled funds, depending on how often you trade or transfer money on your Robinhood account.

The reason why your funds are being withheld and processed for a particular time (settlement period), is that the Securities and Exchange Commission (SEC) mandates a waiting period on financial institutes so that buyers, negotiators (Robinhood), and sellers all get time to complete their end of the stock exchange.

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How to withdraw Unsettled funds on Robinhood?

Naturally, bank deposits and selling stocks are two factors of declaring funds unsettled. And to see your unsettled funds in Robinhood, simply go to the Accounts tab and scroll down to the Settlement Funds section. Here, you’ll see a breakdown of your settled and unsettled funds.

Having said that, unfortunately, If you want to withdraw your unsettled funds from Robinhood, you’ll have to wait for those funds to settle first. It takes 2-3 business days for a stock sale to settle and the funds to be deposited into your account.

However, Robinhood does allow its user to perform some trading operations with unsettled funds like buying more stock while you wait for your funds to get settled.

But that depends solely on the type of account you have with the platform. There are basically three kinds of profiles you can have with Robinhood:

  • Cash account
  • Instant account
  • Gold account

A user with an Instant or Gold account in Robinhood has an immediate permit to money from bank deposits and earnings from exchange transactions that are not yet settled in your Robinhood account.

Subject to the limitation an Instant account user can immediately trade with up to $1,000 of unsettled money whereas a Robinhood Gold user has an upper limit of $5,000.

And if you have a cash profile, then no, you won’t be able to touch the funds until they get settled.

Also when it comes to crypto trading, Robinhood applies the same procedure. So, if you’ve sold $200 worth of Bitcoin you can instantly buy $200 worth of Litecoins. Only when it comes to withdrawal of the money earned you have to wait through the settlement period.

Nothingwithstanding you cannot use unsettled funds to: 

  • Place a sell order for stocks or crypto that you own
  • Cover a margin call
  • Withdraw money from Robinhood using Instant or Standard transfers

If you have unsettled funds in your Robinhood account and you close your account before those funds have settled, those funds will be frozen and you won’t be able to access them. So, if you’re thinking about closing your Robinhood account, make sure you use or withdraw any unsettled funds first.

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