Robinhood Raises Interest Rates to 18 Times the National Average: What Investors Need to Know

Robinhood Markets Inc HOOD offers interest rates on uninvested cash at 18 times the National Savings Rate.

What happened: Robinhood raised its "Robinhood Gold" interest rate to 4.15% APY, while the national average interest rate on savings is 0.33%.

The retail broker said the new rate will take effect on Friday and will be available to new and existing Gold customers enrolled in the cash sweep.

Robinhood's cash transfer program automatically transfers uninvested cash from the brokerage account to depository accounts at a network of six program banks. Cash deposited at these banks is covered by FDIC insurance up to a maximum of $1.5 million.

With the interest rate compounded daily, clients will be able to earn even more income on their uninvested money, with no cap. Robinhood said interest is paid monthly.

Robinhood Gold subscribers also have access to several other benefits, such as larger instant deposits and 7.25% margin investing.

With the latest interest rate hike granted by the Federal Reserve, Robinhood said it is "doing what's best for customers by passing on those savings."

Read next: After the Fed's rate hike this week, jobs and major earnings surprise reports, what is the next step for the market?

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