Funds received from the sale of a security are considered unallocated funds (also known as unallocated cash) from the time the trade order is placed until the end of the settlement period (see below for details on settlement periods). Because the shares have a settlement period of two business days, the proceeds from the sale of the shares in the cash account are considered unallocated for two days after the transaction date because the sale is technically not yet complete.
Users who are new to Robinhood are often confused about the usefulness of unsettled funds and even what they really mean. So, if you want to know what are unsettled funds on Robinhood, here is more about that.
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What are unsettled funds on Robinhood
Simply put, unsettled funds are stocks that are waiting to be traded. According to rules and regulations set by the SEC, investors or traders must wait a certain amount of time before they can receive these funds. Until then, they will be known as unsettled Robinhood funds and can serve you in various ways.
You should know that it isn’t possible to withdraw unsettled funds from your bank account. This can only be done after the funds are settled, which usually takes up to 2 days. This means that unsettled funds are like pending bank transactions that have not yet been settled. Because you haven’t technically received the amount, it’s called “unsettled”, but unlike the money that’s transferred to your account, it can’t be used, this money can be used in interesting ways.
Why can you see unsettled funds in your account
The two main reasons you may see these funds in your account are:
- You have just transferred some amount from your bank to Robinhood, but the transaction isn’t yet complete.
- You sold a stock at Robinhood and the money from the sale is pending or hasn’t yet been deposited into your account.
Robinhood account holders almost always have some funds of this nature associated with their name, so there is no need to worry about it. The amount you have will vary from time to time depending on how often you trade or invest in stocks.
How to withdraw unsettled funds from Robinhood
There is no option to withdraw the unsettled funds to your traditional bank account. However, you can use these funds to buy new stock. If you have a Robinhood Instant account, the company will allow you to use up to $1,000 of unallocated funds for new stock purchases. Robinhood Gold members can use up to $5,000. If you have a Plain Cash account, you will not have early access to any unallocated funds.
The number of funds available for early access will automatically show up in your Buying Power score. No additional action is required. You may make a new stock purchase up to the maximum Buying Power amount.
The unsettled funds in your Robinhood account are something you can use very effectively. The amount you have determines your purchasing power. This, in turn, will determine what you can do with those funds.
Splaitor doesn’t provide any investment, money management, or trading advice. Read our Disclaimer to know more.
