Last updated on July 27th, 2022 at 12:55 am
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Robinhood had several incidents in recent memory when users were unable to withdraw money. At least one event affected probably every American user of Robinhood when it stopped all withdrawals.
You must know the reasons why you can’t take your money out of Robinhood if you are facing this issue.
You can’t take your money out of Robinhood if a trade isn’t settled, the transferred money isn’t deposited, or your account is restricted. Robinhood also has daily withdrawal limits that you may be over.
Also, sometimes there may be a trading halt. Account-specific issues are common, too.
Withdrawing money from Robinhood is subject to its internal procedures and your bank’s processes. Those banking with Sutton Bank, like Robinhood, may not face any problem.
This guide discusses all the reasons & solutions for you to take your money out from Robinhood.
6 Reasons Why You Can’t Take Your Money Out Of Robinhood
All trading platforms, brokerages, and wealth management companies must adhere to the SEC rules. Robinhood isn’t an exception.
On top of that, Robinhood has numerous policies regulating how you can use their service, like most trading apps, robo advisors, and fund managers.
You should not experience any significant trouble if you withdraw money per the policies and terms of service. Otherwise, Robinhood may reject your withdrawal or transfer request.
Let’s discuss the 6 reasons that typically affect withdrawals from Robinhood.
Your Trade Isn’t Settled Yet
The SEC has a T+2 days trade settlement policy. If you trade on a Monday, the proceeds from the sale or the cash will be available in your account after 2 trading days, hence Wednesday in usual circumstances.
You cannot withdraw any part of the cash that has not been settled yet. However, you can take out any money that is already settled and available in your Robinhood account.
Thus, you can reduce the amount you wish to withdraw to avoid a transfer request rejection.
The T+2 days exclude weekends and holidays. The Wednesday in the cited example may be Thursday or later if there is a holiday.
Also, disputes can cause unavoidable delays. However, these issues are not unique to Robinhood. This settlement cycle is for everyone.
You may circumvent the settlement cycle rule with Robinhood’s Instant and Gold accounts. These accounts are for users seeking faster withdrawals, among other special features.
Both the accounts empower you to take money out before a trade is settled per the T+2 rule.
Your Account Is Temporarily Restricted
Robinhood restricts accounts for various reasons. Typical triggering factors are inaccurate information, transfer reversals, suspicion of fraud, and negative account balance.
Also, you could get flagged for pattern day trading if you have a margin account.
Furthermore, Robinhood restricts accounts per the day trade calls policy. You should not exceed the day trade limits. Also, you must resolve the day trade calls you receive within the mentioned time.
Violating these policies will restrict your account, and you can’t take money out from Robinhood.
Robinhood does not authorize such transactions to avoid a margin call, thus rejecting your transfer or withdrawal request.
You Have Exceeded The Withdrawal Limits
Robinhood has withdrawal limits: maximum 5 transactions or $50,000 per business day. Your account may be temporarily restricted if you exceed these limits. Also, you cannot cash out $50,000 on a business day if the account balance dips below the minimum criterion.
Robinhood may reject specific withdrawal requests based on pertinent factors. For instance, you cannot take out a sum that will reduce the account balance to less than an imposed account levy.
You have to reduce the withdrawal amount or wait until sufficient funds are available.
There Is A Trading Halt
Like many brokers, Robinhood imposed a trading halt on GameStop due to extreme volatility. Such trading halts can happen in the future, too.
Your account may be restricted during such events. However, not every broker may impose a withdrawal restriction like Robinhood.
Robinhood reasoned that their decision to restrict withdrawals was due to capital requirements, not other issues. It is unclear if the company will impose similar withdrawal restrictions when one particular stock stops trading for some time.
You Have Changed Your Bank, Account, Or Both
According to Robinhood’s withdrawal rules, you must provide additional information to transfer money to a bank account other than the one used for a deposit. This criterion is applicable for 60 days from the deposit date.
Thus, you cannot transfer money from Robinhood to a different bank account unless you provide:
- A reason
- Statements to prove that both accounts are indeed yours
- Proof of a government-issued ID
User Account-Specific Issues
You cannot cash out referral stocks. According to Robinhood’s account restrictions policies, a client or user must retain the cash value of a referral stock for at least 30 calendar days from the receipt date.
You can sell the referral stock within 30 days. However, the proceeds should remain in your account. The cash will be available for withdrawal after the 30-day window.
Thus, Robinhood will reject a transfer request if you try to withdraw an amount that includes the cash value of the referral stock.
Robinhood does not accept all payment methods, be it for deposit or withdrawal. You may try to connect an account, digital wallet, or payment app with Robinhood.
However, it may reject a withdrawal request if the transfer method is not supported.
Besides, users may have to explain why they are switching from one source account to another. The same bank account change policy of Robinhood applies to other payment methods, too.
Robinhood debit card users must verify the available funds before initiating a withdrawal. A transfer request when a debit card transaction reduces the available account balance leads to rejection.
Robinhood has had a systemic customer service problem. The company has often announced its plans to expand the support team and revamp the entire approach. Users can now access the 24/7 phone support for account-related assistance and financial advice.
The most pragmatic step is avoiding all the inadvertent errors and potentially account-restricting actions discussed in this guide. If you operate your account and withdraw funds as specifically systemized by Robinhood, you should not encounter a rejection nor experience withdrawing issues.