Robinhood brokerage app is jumping on the week-long promo trend and just teased Robinhood HOOD Week (“HOOD” is their stock symbol) from October 16, 2024 to October 27, 2024. The front page is vague but inside the full terms you can see exactly what they will be offering. They are still aggressively collecting assets, and are rolling back out some very competitive cash bonuses when you transfer in assets from external brokerages:
- 1% bonus on ACATS transfers to your Robinhood joint or individual investing account from an external brokerage. Two-year minimum hold period.
- 2% bonus on ACATS transfers with a margin balance of $10,000 or more to your Robinhood joint or individual investing account from an external brokerage. Two-year minimum hold period.
- 3% on ACATS transfers to your Robinhood IRA with a Robinhood Gold subscription, excluding rollovers. Five-year minimum hold period.
Hodl on, though! Transfers must be initiated between 12 AM ET on October 16, 2024 and 11:59 PM ET on October 27, 2024.
Robinhood will also reimburse up to $75 in outgoing transfer fees with transfers of $7,500 or more. This is a one-time reimbursement per account type, per external brokerage.
The asset retention requirement requires that you maintain the transferred assets in your Robinhood account for at least 2 years for the 1% or 2% bonuses and 5 years for the 3% bonus. If you withdraw assets and the balance falls below the initial transfer amount, Robinhood reserves the right to reduce or revoke your bonus, in full or in part.
The 2% bonus with margin balances is an interesting new wrinkle, and it could very easily be worth it “create” a margin balance ahead of time in preparation for the promo week. You’d want to withdraw your cash, and then buy something on margin – even SGOV or another Treasury Bill ETF would work. Paying even 12% interest on $10,000 of margin for an entire month would only be $100 of interest. An extra 1% on $100,000 transferred is worth $1,000, an extra 1% of $1 million is $10,000, and so on.
I didn’t even know you were allowed to transfer margin balances, but apparently that is one of the features of the ACATS system. I suppose it’s like a balance transfer between credit cards, and Robinhood really wants your interest-accruing debt.
I’ve already written multiple articles about past flavors of these Robinhood promos, and I participated in the 3% IRA bonus previously. As always, read through the terms and understand that you’ll be locked into Robinhood for two to five years. Since I’m already partially locked-in, I am pondering that new 2% margin transfer bonus. 🤔
- Robinhood Gold 3% IRA Match Review (Note that the IRA bonus requires a Gold subscription.)
- Robinhood ACAT Bonus: 1% of Taxable Brokerage Assets
- Robinhood Gold 1% Deposit Boost
- Robinhood Gold Free $1,000 in Margin
(Anyone understand the meaning of the cherry?)
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So do they credit the bonus noe or at the end of the holding period- 2 to five years?
The cherry is on top of it – commonly for a sundae! So, these bonuses are the cherry on top of the great Robinhood services/offerings?
Ah, cherry on top, I guess that’s it! 🍒
Bonus credits right away, but they will claw it back if you withdraw early. You can invest the bonus right away. I bought more of the same ETF.
“The bonus will be credited to your Robinhood account within 5-7 business days after the transferred assets fully settle.”
So how do margin interest rates work with a transfer?
If I borrow $100k @ 12% from my current brokerage and then transfer that to RH where the margin interest is 6.25%, which rate do I end up paying on my RH transferred margin balance?
It makes a big difference in overall return depending on the rate unless you’re moving a lot more than $100k.
I would assume that wherever the assets are, they are charged by that broker at the broker’s prevailing rate. The question is more about the timing of the transfer, which can vary. Fidelity usually complies pretty quickly. I’d estimate 5-7 business days. If concerned about the interest, I’d delay the margin until the day before you initiate the transfer.
Just wanted to add, if you are creating this margin by buying SGOV, you’ll still be earning the interest from SGOV which will offset the margin interest. Ex. if you earn 5% and pay 7%, the net cost is only 2%.
Any idea if and how they are making money on this, especially from buy and hold investors?
1% ACAT bonuses are not always around but still come up regularly. 2% are pretty rare. 3% is very, very rare. But I’m sure some marketing analyst has put a value on IRA customer assets as higher than others because of the “stickiness” of IRA assets. Plus a 5-year hold is quite long. If you make someone keep something at a place for 5 years, I’m betting a lot of people won’t bother to transfer out.
Now that I already have some money at RH, I am more likely to transfer in other assets. I’m familiar with the app, already paying for Gold, etc. Of course, I’m also waiting for a good bonus like this.
I couldn’t find the fine print where it says you only need 1 year of Gold membership. Is this stated somewhere?
If you scroll down to the bottom on the offer main page (first link above), you’ll fine this:
I am required to take RMD yearly so the IRA balance will be reduced from the initial deposit amount. That seems to make this program of little value. Please advise.
Well, your bonus would be reduced, but for example if you took out 30% over 5 years then you’d still get a bonus on 70% of your initial transfer amount. Still could be good deal.
I have two “rollover Ira” accounts at Fidelity and Schwab. Would I get the 3% tranferring these or is that type of IRA what they mean by “excluding rollovers” in the disclaimer?
I believe “rollover” means a 401k rollover. If it’s already in IRA form, I believe that should be fine.
“Rollovers from employer-sponsored plans and annual IRA contributions are ineligible for this offer.”
Has anyone considered leaving the money with RH? Paying the yearly $50 gold and maximizing the IRA contribution, for the yearly 3% match, would pay for itself. And using the brokerage account would net you an instant 1% bonus with every dollar invested.