A cash account on Robinhood is a standard brokerage account in which every trade is paid for in full with money already settled in the account. There is no borrowing from Robinhood, no margin interest, and no risk of a margin call. It is one of two taxable account types Robinhood offers, the other being a margin account, and it is the simpler, lower-risk option built for investors who want to buy and hold with the money they actually have.
How It Works Day to Day
The rule is simple: you can only spend what you have. When you buy a stock, ETF, or option, Robinhood deducts the full purchase price from your available cash. If the settled cash isn’t there, the order won’t go through. You can’t borrow the difference, and Robinhood can’t force-sell your holdings to cover a shortfall.
Selling is where the timing matters. Proceeds from stock, ETF, and options sales follow a T+1 settlement cycle, meaning the cash from a sale settles one trading day after the trade executes.1Robinhood. T+1 Settlements That’s an industry-wide SEC and FINRA standard, not a Robinhood rule. In a cash account you have to wait for that settlement before using the proceeds to buy something else.2Robinhood. Settlement and Buying Power Margin account holders can trade with unsettled funds immediately; cash account holders cannot.
Crypto is the exception. Proceeds from crypto sales are available immediately to buy other assets, including stocks, options, or more crypto, because crypto trading runs through a separate entity, Robinhood Crypto, LLC, rather than the brokerage side.2Robinhood. Settlement and Buying Power Withdrawing crypto proceeds to a bank account still takes up to five business days.3Robinhood. Crypto Buying and Selling Futures also settle differently, marked to market at the end of each trading day rather than following T+1.
What You Can and Can’t Trade
Stocks and ETFs trade normally. Options trading is available, but only at Level 2, which covers buying long calls, buying long puts, and selling covered calls.4Robinhood. Basic Options Strategies Level 3 multi-leg strategies such as spreads, iron condors, and iron butterflies require a margin account.5Robinhood. Robinhood Accounts
Cash accounts also can’t perform options rolling, which closes an existing option and opens a new one in a single transaction. You can still do it as two separate trades. Futures trading is available in a cash account as long as you’ve been approved for options investing.5Robinhood. Robinhood Accounts Short selling is not: opening a short requires a margin account with at least a $2,000 portfolio value.6Robinhood. Short Selling
How It Differs From a Margin Account
The one real difference is borrowing. A margin account lets eligible users borrow from Robinhood against their existing securities for extra buying power.7Robinhood. Margin Overview A cash account does not. Everything else flows from that.
- Buying power in a cash account equals settled cash. In a margin account it can exceed the cash balance because Robinhood extends credit.
- Margin accounts can trade with unsettled funds. Cash accounts cannot.5Robinhood. Robinhood Accounts
- Margin borrowing accrues daily interest based on the settled margin balance and the federal funds rate. Cash accounts have no loan and no interest charges.7Robinhood. Margin Overview
- Margin magnifies gains and losses, and it is possible to lose more than you originally deposited. Cash accounts carry normal market risk only.8Robinhood. Using Cash Versus Margin
- If a margin account’s holdings drop below Robinhood’s maintenance requirements, the holder must deposit more funds or Robinhood may sell securities without notice. Cash accounts are never subject to margin calls.7Robinhood. Margin Overview
You can switch between the two account types on Robinhood, but not more than once per trading day.5Robinhood. Robinhood Accounts Upgrading to margin takes a separate application and a $2,000 minimum portfolio value.7Robinhood. Margin Overview
Day Trading in a Cash Account
The pattern day trader rule has never applied to cash accounts. It historically required margin account holders who placed four or more day trades in five business days to maintain at least $25,000 in their account; that threshold didn’t reach cash accounts.9Robinhood. Day Trading Risk Disclosure As of June 4, 2026, FINRA replaced the PDT framework with new intraday margin standards under amended Rule 4210.10FINRA. Regulatory Notice 26-10 The replacement rules still apply only to margin accounts, so cash accounts remain outside the regime.
What that means in practice: there is no regulatory frequency cap on day trades in your cash account. The only limit is settled cash. Every buy still needs money that has already settled, which naturally caps how fast you can cycle through trades.
Violations to Watch For
Because trading with unsettled funds is prohibited in cash accounts, certain patterns can trigger violations under Federal Reserve Regulation T. These apply across all brokerages.11SEC. Investor Bulletin – Trading in Cash Accounts
- Freeriding: buying a security and selling it before paying for the purchase. A single freeriding violation can result in a 90-day account freeze, during which any new purchase must be paid in full on the trade date.11SEC. Investor Bulletin – Trading in Cash Accounts
- Good faith violation: buying with unsettled funds and then selling that security before the original funds settle. Three in a 12-month period can restrict the account to settled-cash-only trading for 90 days.
- Cash liquidation violation: selling other securities to cover a purchase when there isn’t enough settled cash. Three in a rolling 12-month period can trigger the same 90-day restriction.
All three come down to timing. Waiting the one trading day after a sale, and tracking which cash in the account is actually settled, keeps you clear.
What Happens to Your Uninvested Cash
Money sitting idle in a Robinhood account is protected two ways. While it’s held in the brokerage account itself, SIPC covers it up to $500,000, with a $250,000 limit on cash claims.12Robinhood. Deposit Sweep Program
Cash above $10,000 across your individual investing accounts is automatically swept to a network of program banks under Robinhood’s Cash Sweep Program, where it becomes eligible for FDIC insurance up to $2.5 million for individual accounts and $5 million for joint accounts, spread across partner banks at $250,000 per bank.12Robinhood. Deposit Sweep Program The first $10,000 stays as a free credit balance in Robinhood’s Brokerage-Held Cash Program rather than being swept.13Robinhood. Cash Program Interest Rate
Robinhood Gold subscribers ($5 per month) earn 3.35% APY on eligible uninvested cash through the High-Yield Cash Program, a rate current as of February 2026 and subject to change with the federal funds rate and other market conditions.14Robinhood. Earn More Interest Non-Gold members don’t get that rate. Interest compounds daily and pays monthly, only on settled cash, and users carrying a margin debit balance don’t earn interest at all.13Robinhood. Cash Program Interest Rate
Who It Suits
A cash account is the natural starting point for most investors, especially newer ones and anyone who prefers to buy and hold. The math stays simple: gains and losses are limited to what you actually invested. No interest charges, no margin calls, no scenario where you owe more than the account balance.
The tradeoff is flexibility. You can’t amplify returns with leverage, can’t short, can’t trade Level 3 options strategies, and have to wait for stock and ETF sales to settle before reinvesting. Active traders will feel the settlement delay, though immediate crypto proceeds and same-day futures settlement take some of the edge off. For most people the forced discipline of trading with settled money is the point.