How to Fix: Robinhood Account Restricted From Purchasing? [2023 Update]

As a Robinhood user, few things are as frustrating as suddenly being barred from buying stocks or withdrawing your hard-earned money. But don‘t panic – in most cases, Robinhood account restrictions can be resolved quickly if you understand what triggered them and take the right steps.

In this comprehensive guide, we‘ll explore why Robinhood restricts accounts, how long they typically last, and most importantly, how to get your account back in good standing.

Why Are Robinhood Accounts Restricted So Often?

Robinhood account restrictions are relatively common compared to other brokers. A 2021 survey found that over 55% of Robinhood users have faced some type of trading or withdrawal restriction.

There are a few key reasons for this:

• Young investor base – The average Robinhood user is only 31 years old. Inexperienced investors make more mistakes triggering restrictions.

• Easy access to options, margin – Robinhood gives novice traders access to complex products. This leads to unsettled funds or cash account violations.

• Cryptocurrency restrictions – Robinhood limits crypto trading to approved states. Users often don‘t realize their location restricts access.

• Rapid account signup – The easy Robinhood sign up process leads to more unverified users. Unverified accounts are more likely to be restricted.

So in short, Robinhood‘s popularity with novice traders combined with quick account setup contributes to more accounts getting restricted for regulation violations or identity issues.

Common Robinhood Account Restriction Triggers

Robinhood limits accounts for a variety of reasons based on trade activity, unsettled funds, account details, location, and suspected fraud. Here are some of the most common restriction triggers:

• Pattern day trading violation – Making 4+ day trades in 5 days with under $25K account balance

• Cash account trading violation – Buying securities with unsettled sale proceeds or unsettled deposits

• Margin trading violation – Exceeding margin maintenance requirements or day trade calls

• Cryptocurrency regulations – Attempting to trade crypto assets if located in a prohibited state

• Share ownership limits – Owning >5% of outstanding shares in a company

• Unverified identity – Not completing identity verification after opening account

• Suspicious activity – Activity flagged as potentially fraudulent per Robinhood user agreement

According to Robinhood‘s user agreement, they reserve the right to restrict accounts for any reason to comply with legal requirements or prevent prohibited activity.

How Long Do Robinhood Restrictions Last?

The duration of account restrictions varies based on the specific limitation you triggered:

• Cash account violations – Trade suspensions last 4-6 days for proceeds/deposits to settle

• Margin violations – Restrictions remain until margin call is met or deficit is corrected

• Pattern day trading – Buying power limited for 90 days if under $25K balance

• Cryptocurrency – Typically permanent unless you relocate or satisfy identity verification

• Unsettled ACH – Deposit-related restrictions lifted after 4-6 day settlement period

• Fraud concerns – Account frozen for weeks or permanently depending on investigation

• Share limits – Permanent unless you sell shares to get under 5% ownership

• Identity verification – Restrictions lifted once you complete the verification process

In most cases, restrictions are temporary and can be resolved within days or weeks. But activity violations or suspected fraud may lead to permanent restrictions in severe cases at Robinhood‘s discretion.

Steps to Get Robinhood Restrictions Removed

So what should you actually do if your account gets restricted? Follow these steps based on the specific restriction type:

Wait for Funds To Settle

If you triggered cash account or ACH-related restrictions, time is the only remedy. You‘ll need to wait 4-6 business days for the sale proceeds or bank deposits to settle before restrictions are lifted.

Don‘t make the mistake of thinking you can use unsettled funds to trade or withdraw – this will only extend the restrictions. Be patient and let the settlement process complete.

Meet Pattern Day Trading Requirements

Did you make too many day trades with a sub-$25K account? If so, your buying power will be temporarily restricted for 90 days.

To regain full instant access, deposit funds to surpass the $25,000 account minimum. This will mark your account as a pattern day trader and remove restrictions.

Correct Margin Trading Violations

If you got an overnight margin call or exceeded your margin maintenance requirements, you‘ll need to promptly deposit funds to cover the required minimum equity.

Correcting margin deficits will get your account back in good standing. Take the opportunity to review Robinhood‘s margin rules to avoid future issues.

Contact Robinhood Support

If flagged for potential fraud or suspicious activity, you‘ll need to directly engage with Robinhood support for next steps. Be ready to provide documentation to validate your identity, trading strategy or recent account activity.

Respond to all inquiries promptly and completely to resolve their concerns expediently. The threat of permanent restriction looms if issues remain unaddressed.

Change Your Location

For cryptocurrency-related restrictions, the fix is straightforward – move to a state where Robinhood Crypto is supported, then contact support to request access.

Robinhood currently allows crypto trading in 30 states, provided you satisfy identity verification requirements.

Update Your Account Information

If your personal details or identity documents are outdated, refresh them ASAP. Keeping your account properly verified is key to avoiding restrictions.

Proactively update changes to your name, address, phone number, email, bank details or other identifying info.

Sell Shares to Meet Ownership Limits

If you trip the restrictions on max share ownership percentage, you‘ll need to sell down your position below 5% of total outstanding shares.

These limits are imposed by FINRA to prevent market manipulation by large shareholders.

In summary, be aware of the rules, meet account requirements, and keep your details current. This will make restriction headaches less likely in the future.

Tips to Keep Your Robinhood Account Restriction-Free

Here are some pro tips from experienced Robinhood users and online reviewers to keep your account trading happily:

• Maintain a $25K+ account balance if you‘ll be day trading stocks frequently

• Avoid unsettled funds violations – wait for cash to settle before reinvesting proceeds or withdrawing

• Stick to 4 or less day trades per week if your balance is under $25K

• Enable two-factor authentication for added account security

• Triple check your location is approved for Robinhood Crypto before attempting to trade

• Complete identity verification promptly with valid ID when requested

• Never share your Robinhood password or give account access to others

• Carefully review deposit timeframes – especially when using Robinhood Instant

• Keep your email, bank details, and address current to avoid outdated account flags

• Maintain sufficient margin collateral if trading on margin to prevent calls

Following the best practices outlined above will help you steer clear of pesky restrictions so you can enjoy frictionless stock and crypto trading.

The Takeaway: Stay Informed, Meet Requirements, and Keep Your Account Updated

Dealing with limited account functionality is no fun, but armed with the right information, Robinhood traders can avoid most pitfalls.

Now you know why restrictions happen, how long they last, and what to do based on the specific limitation triggered.

With a properly funded account, location compliant for crypto, avoidance of trading violations, and prompt identity verification, you should be off to the races with a restriction-free Robinhood experience. Just stay patient if faced with a temporary limitation to allow proper time for resolution.

Knowledge is power when it comes to seamlessly navigating the Robinhood platform. Follow this guide and trade or withdraw worry-free. Here‘s to keeping your account – and your trading ambitions – actively unrestricted!