The new Robinhood credit card promises 3 percent cash back on all purchases, without limits. When asked if this rate would stay constant for 18 months, the company’s CEO, Vlad Tenev, did not guarantee it.
This offer is more generous than most, as major card issuers typically offer cash back rates up to 2 percent. The Robinhood Gold Card, the company’s first branded credit card, has no annual fee but requires a monthly fee to be part of the gold program for better interest rates and perks.
Robinhood aims to attract new credit card users and approves nearly all gold member applications. The company hopes to profit from customers who borrow responsibly. Additionally, cash back earned must be deposited into a company brokerage account before it can be transferred elsewhere.
The Robinhood card may not appeal to those who try to maximize rewards by switching cards frequently. The company incentivizes customers to keep cash in their brokerage accounts and offers bonuses for moving additional funds to Robinhood.
While some critics question the profitability of the 3 percent cash back offer, Robinhood reserves the right to change or terminate the rewards program at any time. Customers engaging in “gaming” may have their cards cancelled.
Customers who have faced Robinhood’s previous controversies may question the company’s trustworthiness. However, Mr. Tenev believes that the company’s past experiences will instill confidence in customers. He assures that Robinhood will continue to offer valuable products.
Ultimately, the new card offers undeniable value, but Robinhood must demonstrate its ability to sustain the 3 percent cash back offer.