Zero-commission stock trading app Robinhood now has 6 million accounts, up from 4 million just 5 months ago. The app is great and I’ve been using it for a while now. You also get a free stock when you sign up. That free stock is random and you could possibly even get an Apple stock, but most likely you’ll get something around $5.
Robinhood has been improving constantly. They added a web platform and options trading. They are also offering banking services and free cryptocurrency trading. Now they’re making their fee-free platform even better. Today they started migrating accounts to the new in-house clearing service a process that will take a few months. That will save it from paying clearing fees on stock, option, ETF and cryptocurrency trades. And in return they will lower some of the few fees that they charge.
Robinhood is eliminating or reducing some of its edge case fees: $10 broker assisted trades, $10 restricted accounts, $50 voluntary corporate actions and $30 worthless securities processing will all now be free. Robinhood is meanwhile cutting its margin on fees passed on by banks or FedEx, so ACH reversal fees will drop from $30 to $9, overnight check delivery from $35 to $20 and overnight mail from $35 to $20.
As per TechCrunch, Robinhood is able to keep trades free because it earns revenue from interest on money kept in Robinhood accounts, selling order flow to exchanges that want more liquidity, and its Robinhood Gold subscriptions, where users pay $10 to $200 per month to borrow $2,000 to $50,000 in credit to trade on margin.