If you use Robinhood, you’ve probably already come across “unsettled funds”.
This can be an unnerving issue if you’re new to the game, because what does it mean? More than that, how does it impact you on your journey with cryptocurrency?
Read on to find out what you need to know about unsettled funds, including what they mean, and how they impact you.
What Does “Unsettled Funds” Mean in Robinhood?
In simple terms, unsettled funds are like pending transactions in your Robinhood account.
They’re usually nothing to worry about – just funds that haven’t yet been cleared. You haven’t done anything wrong, so if this is coming up, don’t worry! It’s common when you have either sold stocks or transferred money from your bank account.
If you have unsettled funds, settling should only take between 3-5 business days. In that time, however, you’re probably wondering if you can actually do anything with them.
If you want to learn about how unsettled funds can affect you, just keep reading. There’s a lot to cover, and some answers might surprise you!
Types of Unsettled Funds and What They Can Be Used For
Bank Deposit Unsettled Funds
There’s typically a 3-5 day waiting period to allow funds to settle once you’ve deposited money into your Robinhood account. Thankfully, you are still able to use these funds during this time, but there are a couple of restrictions on this.
You can:
- Transfer money from your Robinhood account using ACH (automated clearing house network) transfer
- Exercise options
- Buy crypto or stocks
You cannot:
- Withdraw any money from Robinhood (see also ‘How To Withdraw Money From Robinhood‘) using Standard or Instant transfers
- Cover a margin call
- Place a sell order on crypto or stocks that you own
Selling Stocks Unsettled Funds
Selling stocks on Robinhood can also lead to unsettled funds. The funds from sales can usually be used immediately, but those funds are still technically considered to be unsettled.
Like with the bank deposit unsettled funds, there are some restrictions on what you can and can’t do with these funds.
You can:
- Transfer money out of your Robinhood account using ACH transfer
- Exercise options
- Buy crypto or stocks
You cannot:
- Withdraw any money from Robinhood using Standard or Instant transfers
- Cover a margin call
- Place a sell order on crypto or stocks that you own
You will get an error message telling you that you have insufficient funds if you try to do any of the options under “cannot”.
You just need a little patience for things to get settled, then it’s back to business.
More About Unsettled Funds in Robinhood
Unsettled funds is a relatively simple concept, but there are some nuances that you should be aware of. We’ll take a look at what you need to know about unsettled funds in the sections below.
Where to View Unsettled Funds in Robinhood
You can go to your accounts tab on Robinhood and scroll down to “settlement funds”.
There, you will be able to see the full breakdown of all your settled and unsettled funds to get a better understanding of them.
The full amount of funds you should have in your account will only be reflected once the funds have settled, so have some patience.
Can Trading With Unsettled Funds Be Done?
Yes, you can. Depending on the type of Robinhood account you have, the amount you can trade will change.
The regular, or non-gold Robinhood account allows you to trade instantly with up to $1,000 and not need to wait for those funds to settle.
If you have a Robinhood Gold, that number rockets up to $5,000.
As such, if you want to do a lot of trading, having a Gold account could be worthwhile. If not, a regular account will be more than enough for most people.
Do Crypto Sales Funds Need to Settle Before Being Used?
Thankfully not. You can use the sales from crypto immediately.
With that being said, you will not be able to withdraw funds in Robinhood until the funds have settled.
Whenever crypto is sold in Robinhood, the funds are deposited into your account instantly. So, as we mentioned before, you will need to wait between 3-5 business days before you can make any withdrawals.
What Happens if Unsettled Funds Aren’t Used?
Unused unsettled funds will be deposited back into your account automatically after the 304 business day waiting period has passed.
The only time this won’t happen is if you close your account before the funds have settled. In this case, the funds will be frozen, and you won’t be able to gain access.
Can Settled Funds Be Withdrawn?
No, you can’t. You will need to wait for the unsettled funds to settle before withdrawing them.
The only exception is if you close your account before the funds have settled. Doing this will freeze funds, and you won’t be able to access them, so be careful!
Do Unsettled Funds Impact Buying Power?
Buying power is impacted by unsettled funds. If you’re attempting to buy stock, but Robinhood is telling you that you don’t have enough buying power, it’s probably because of those unsettled funds.
Money from buying and selling stock isn’t available for use immediately, and the funds need to settle.
You can check if this is the case by seeing if you have any unsettled funds. If you do, then you just need to wait for them to settle.
If you don’t have unsettled funds, and you’re being told you don’t have enough buying power, the stock you’re trying to buy may be too expensive (see also ‘What Are The Most Expensive Stocks?‘).
Preventing Unsettled Funds
There are three things to do to avoid unsettled funds:
- Wait 2-5 business days once the sale goes through before trying to withdraw any money from Robinhood.
- Withdraw all money before closing your Robinhood account. This means you will need to wait for your unsettled funds to settle before withdrawing them.
- Use stash accounts rather than margin accounts.
Final Thoughts
Unsettled funds are basically like pending transactions in a bank account. You simply need to wait 3-5 business days for the funds to settle before you can use them.
Hopefully this helped, and you understand unsettled funds a little more now. Good luck!
That is why I made my site - Stock Maven. Now that I feel settled and confident about trading, I want to be a source of help to anyone else who might be struggling to break into the crypto market successfully.
My website is full of my tips and tricks, as well as information that I have always found interesting about crypto. My friends and family are sick of hearing me talk about it, so now it’s your turn!
I hope that you stick around and find something useful on my site. Remember, to make it big in crypto, you’ve got to be confident! Go for it and don’t look back.
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