Are you an active stock or crypto trader, waking up to a restricted brokerage account can be inconveniencing, if not frustrating. It can lock you out of a lucrative profit opportunity. However, it happens all the time for Robinhood users. Why is your Robinhood account restricted and what can you do about it?
Buying bonds and stocks, and investing in the share market have become easier than ever. Gone are the days when you used to go to the broker’s office or schedule an appointment with your brokerage firm who in return billed you with a hefty fee to buy shares.
Technology is getting advanced along with the competition and the investment process is becoming more flexible. Brokerage firms have started giving so much convenience that you do not need to move even an inch from your house. All work is done sitting at home. And all this has become possible due to the evolution of smart investment firms like Robinhood.
Robinhood is an online discount brokerage that offers a commission-free investing and trading platform. The company gets the vast majority of revenue from transaction-based revenues, including payment for order flow. Basically, it is a fee-free platform that makes trading in the stock market easy — too easy, according to some experts and regulators. And it doesn’t offer the tax-advantaged investment accounts that are key to building long-term wealth.
Why is my Robinhood account restricted?
No investor likes to have a brokerage account limited or blocked. That’s why it helps to know why your Robinhood account could be restricted and how to resolve it if it happens. You can check your account status in your web application. If you see “Your account is restricted,” it means your account meets one or more of these criteria:
- You have not funded your account by bank transfer within 3 days.
- You have withdrawn cash before 6 days have passed.
- You have deposited cash before 6 days have passed.
Robinhood reserves the right to restrict accounts if there is suspicious activity. If your account has been restricted, you can contact [email protected] with additional questions about the restriction on your account.
How long will my account be restricted on Robinhood?
Depending on the reason for the restriction, it can take a few days to several months to go away. For example, exceeding day trading limits can cause an account to be restricted for 90 days. The account restriction is temporary in most cases, and you can get back access to your account. Usually, it is not possible to get the account access back before 90 days, but you can always contact the Robinhood support team for any assistance.
In some rare cases, the account restriction is permanent, which means you won’t be able to get your Robinhood account back. Well, you will be informed through an email about it.
How to remove a Robinhood account restriction?
If Robinhood restricts your account because of stock-related issues, you might also lose access to the crypto trading service. If the restriction is linked to the account balance value being below the required threshold, like in the case of day trading limits or margin requirements, you can correct it by adding money to the account. You will need to contact the broker after you add money to the account to resolve the issue.
Why is my Robinhood account banned from withdrawal?
If you’ve been inactive for a while, your account is temporarily restricted from withdrawals. You can always check on your account status by going to Robinhood’s website and clicking “Visitor?”
If a person’s account is restricted from withdrawal due to periods of inactivity exceeding the required balance of $1000 or more within 30 days, they can unblock their withdrawal button by following all these steps: log in to your Robinhood account and fill in the available form.
Robinhood has faced regulatory fines, public scrutiny, and lawsuits. In 2020, Robinhood was hit with a $65 million fine by the Securities and Exchange Commission (SEC) for misleading customers. It might be a decent option for people who would like to invest in cryptocurrency, though it lacks some of the more advanced features you’ll get with cryptocurrency exchanges. Financial experts advise investors to limit their crypto holdings to about 5% of their overall portfolio and to achieve other financial goals first, such as eliminating high-interest debt, building an emergency fund, and investing in a traditional retirement account.