Are The Perks Of A Robinhood Gold Subscription Actually Worth The Price?

When the Robinhood app debuted, the company was at the forefront of bringing commission-free stock, exchange-traded funds, and cryptocurrency trades to individual investors. Per the Robinhood founders, the company's mission in 2014 was to "build a financial product that would give everyone — not just the wealthy — access to financial markets." Since then, it's consistently ranked as one of the best investment apps for beginners, and Robinhood even rewards newly opened accounts with one share of free stock.

More recently, the company rolled out its premium Robinhood Gold subscription service, but at $5 per month or $50 annually, is Robinhood Gold worth the upcharge versus a standard free account? Let's take a look. To begin, the Robinhood premium subscription offers a much higher rate of return on uninvested funds (cash) stored in the account. Next, Gold subscribers receive a 3% match on all funds deposited into an IRA account held at the brokerage.

To help you make better trades, Robinhood Gold also unlocks access to reports from the research firm Morningstar and Level II market data from the Nasdaq exchange, which provides additional price discovery compared to standard information. Finally, more advanced traders can take advantage of a lower interest rate on margin trades and higher limits to instantly access funds from initiated deposits. Whew! That's a lot to unpack, so let's take a look at the Robinhood perks more closely to see how they fit your individual investing habits.

Perhaps you've recently deposited money into a Robinhood trading account but are still researching how to best invest the funds. Or, you've recently sold some stock and haven't reinvested some or all of the proceeds yet. That cash, sometimes called a "sweep balance," is automatically and seamlessly transferred to an FDIC-insured partner bank, where it remains and earns interest while waiting to be deployed. Typically, the interest rates that brokerages pay on cash balances aren't terrific, however, Robinhood Gold members receive a generous interest rate of 5%, at the time of writing.

That 5% on cash is comparable to the most competitive savings accounts at online banks, and it decimates the 1.5% interest rate paid out to standard Robinhood account holders. Depending on the quantity of cash you typically keep in your account — going to cash can be an investment strategy, too, especially in declining markets — the 5% APY that Robinhood Gold provides could single-handedly justify the $5 per month fee.

For example, 5% minus the typical 1.5% interest rate equals a 3.5% bump for Gold members. That means with a typical cash balance of about $1,700, Robinhood Gold would completely pay for itself, not counting any of the other perks. The math looks like: $1,715 * 3.5% = $60.03. Since the Gold membership costs $5 per month, one year costs $60 if paid monthly.

If your employer offers a matching contribution to your retirement account as a perk, that's great. However, for all others, Robinhood Gold could be your salvation. That's because the brokerage will match 3% of every dollar you contribute into a traditional IRA or Roth IRA, every year. If you're maxing out your IRA contributions each year, this benefit could really pay off.

For example, a $5,000 contribution would receive a $150 match from Robinhood. That's literally $150 in free money. That's compared to a standard Robinhood IRA or Roth IRA, which enjoys a 1% bonus match, which amounts to $50 in our $5,000 contribution example. In this illustration, $5,000 was used as an easy round number, but note that actual contribution limits are higher.

Note there are a few strings attached to Robinhood's generous gesture. To begin, members are required to keep their Gold membership for at least one year following the matched contribution. Additionally, the contributions must remain in the IRA for a period of five years following the contribution date.

The most recent incentive for joining Robinhood Gold is that members can soon apply for the company's brand new — and lucrative — cash back credit card. This weighty stainless-steel Visa card has no foreign transaction fee and earns 3% cash back on anything and everything you purchase, with 5% cash back on travel booked through Robinhood's travel portal. 

Certain credit cards return a slightly higher rate of cash back on specific types of purchases, like gas or groceries, while others alternate bonus categories throughout the year. For example, gym memberships might earn 5% in winter, while hotels earn 5% during summer. The Robinhood Gold credit card has no such restrictions. It's 3% all the time on everything, with no limit on how much you can earn. That's eyebrow raising for a card that doesn't charge an annual fee. That said, you do need to be a Robinhold Gold member to apply, which has an inherent cost of its own. 

Besides generous cash back, the Robinhood Gold card has other perks that are typical of premium credit cards. That includes travel insurance, roadside assistance, extended warranty coverage, and more. Note that because this credit card is so new, it's not technically open to applications at the time of writing. However you can join a waitlist. If there's any downside to the newfangled Robinhood Gold card, it's that there's no welcome bonus to incentivize new accounts. 

With all the flashy incentives of Robinhood Gold already covered, let's next touch on some of the more niche benefits that are likely to appeal to seasoned investors. The first of those is higher instant deposit limits. Regular free Robinhood accounts have a $1,000 instant deposit limit, regardless of the account's balance. On the other hand, members of Robinhood Gold can have instant access to up to $50,000, contingent on their account balance. This instant access to transferred funds can be handy if you want to take advantage of a trading opportunity (like buying a hot stock) right away. That's because it bypasses the traditional waiting period of transferring funds between institutions.

In contrast to traders who need to add funds to their account ASAP to hop on a stock trend, other investors will meticulously pore over reports and evaluate fundamentals before making a trade. For those bookish types, Robinhood Gold offers members access to Morningstar's research on more than 1,700 individual stocks. Note that many investors pay in excess of $60 annually for this research, without any of the other Robinhood Gold benefits.

Finally, if you want to purchase stocks, ETFs, cryptocurrencies, or other investments, but you lack sufficient funds, there's margin trading available. Basically, margin trading boils down to borrowing money from a brokerage firm, in this case Robinhood, at a certain rate of interest, then investing that amount. At the end of the proverbial day, said investment will hopefully gain in value to where the margin loan can be repaid with a profit remaining for the investor.

Margin trading is an advanced, risky technique that's not for the faint of heart. If you still want to participate, Robinhood Gold members can borrow their first $1,000 interest-free, then pay 8% for amounts in excess of $1,000. That's compared to standard non-Gold account holders who pay 12% margin interest. Also, note that while accurate at the time of writing, these rates are based on the federal funds rate, which is subject to fluctuations.

In summary, the basic Robinhood product is considered one of the best in the industry, so it's no surprise that its Gold version delivers considerable value and features in excess of its modest cost of $5 a month or $50 annually. Not every trader will take advantage of these extras, but if you park considerable cash in your account or have an IRA with Robinhood in lieu of, or in addition to, a company-sponsored 401(k), upgrading to Gold is a no-brainer. Best of all, a free 30-day trial is available so investors can determine suitability for themselves.