Robinhood Gold Card Overview
The Robinhood Gold Card has transformed the credit card landscape by offering an astonishing 3% cash back on all purchases. This enticing offer raises the question: is it a fleeting promotional gimmick or a sustainable game-changer in the credit card industry?
With the potential to earn 3% cash back on every transaction, the appeal is hard to deny. If Robinhood can maintain this competitive reward rate, it could significantly disrupt the market. After a gradual rollout with limited approvals, reports indicate an increase in availability as of January 2025. Many users have shared positive experiences regarding reasonable credit limits. Despite still being on the waitlist myself, the allure of this card is compelling—especially since my largest expenses, including health insurance and taxes, typically don’t qualify for bonus categories with other issuers. Nonetheless, Robinhood’s historical performance raises some valid concerns.
- How Long Will It Last?
- It’s a Great Card for Paying Taxes
- This Is a Bad First Credit Card
- If You’re Into Travel Rewards, You Can Buy Points When They Go on Sale With Your 3% Cash Back
- The IRA Match Is a Good Incentive to Keep a Gold Membership
- Do Robinhood Customers Mind Paying Debt?
- How Much Pressure Will Other Credit Card Issuers Have to Increase Their Rewards?
Key Features of the Robinhood Gold Card
The Robinhood Gold Card boasts several noteworthy features:
- 3% cash back on every purchase, with no restrictions on categories.
- 5% cash back on travel bookings made through Robinhood’s travel portal.
This card is exclusively available to Robinhood Gold subscribers, which costs $5 monthly or $50 annually. It’s important to note that Robinhood does not provide 3% cash back in cash; instead, rewards are issued as points. These points can be redeemed for a cash deposit into your Robinhood brokerage account, travel through the Robinhood portal, gift cards, or for online purchases at select retailers. Each point holds a value of 1 cent, regardless of how it’s redeemed.
Currently, the card’s availability is limited, requiring potential applicants to join a waitlist, which necessitates having a Robinhood brokerage account. While joining the waitlist with a free account is possible, only Robinhood Gold members can actually obtain the Gold card. The company has also indicated that current Gold members will receive priority access. However, joining the waitlist does not guarantee approval and does not affect your credit score. I joined the waitlist immediately after the card’s announcement in March 2024 without a Gold membership, and as of December 2024, I am still waiting for an opportunity to apply.
Regardless, several key considerations linger before fully committing to this card.
1. How Long Will It Last?
It’s reasonable to question the permanence of the 3% cash back rate. In June 2023, Robinhood acquired X1, which initially offered the same 3% cash back on all purchases for those spending $15,000 annually. However, just 14 months later, X1 altered its rewards structure, capping the 3% cash back at spending between $1,000 and $7,500 each month, while transactions below $1,000 and above $7,500 earned only 2%. Will Robinhood follow suit? While user reports indicate that the cash back is functioning as advertised, skepticism about the longevity of such offers from a company with a checkered history of customer service is understandable.
2. It’s a Great Card for Paying Taxes
One notable advantage of this card is its potential value when paying taxes. The IRS allows credit card payments through various providers, with the lowest fee being 1.82%. This means you could effectively earn a profit of 1.18% on your tax payments by using the Robinhood card. Even if the credit limits are modest, it’s feasible to pay off the balance and make multiple payments, making this card particularly beneficial for individuals with significant tax obligations, such as the self-employed.
3. This Is a Bad First Credit Card
Robinhood’s customer base tends to skew younger, with many users possibly holding just one or two credit cards, or even none at all. Having a card with a fee as one of the oldest accounts on your credit report can be detrimental, as credit history length is a crucial factor in determining credit scores. While the Gold card doesn’t come with an annual fee per se, maintaining a Robinhood Gold account incurs a monthly charge of $5. Thus, if the Gold card becomes one of your oldest accounts, you may find yourself continually paying for the Gold membership to preserve your credit history, even if you don’t find the card beneficial. Unlike other issuers, Robinhood lacks options for downgrading cards, making it less ideal for those seeking a no-annual-fee credit card with future flexibility.
4. If You’re Into Travel Rewards, You Can Buy Points When They Go on Sale With Your 3% Cash Back
For travel enthusiasts, another potential benefit is the ability to use your 3% cash back to purchase points from airline loyalty and hotel programs when they are on sale. Personally, I often buy points from various loyalty programs during promotional periods, which allows me to gain extra value. For instance, Wyndham points may sell for as low as 0.93 cents each, while I personally value them at approximately 1.25 cents. Thus, purchasing points at a discount can provide substantial savings for those who know how to effectively leverage their rewards. Although the Robinhood Gold Card isn’t primarily a travel rewards card, the cash back can be strategically utilized for point purchases, allowing savvy users to maximize their value. However, for those interested in travel rewards, it’s worth considering whether other cards, such as the Capital One Venture X, might offer better long-term value through transferable points.
5. The IRA Match Is a Good Incentive to Keep a Gold Membership
For those weighing the benefits of the 3% cash back against the cost of Gold membership, Robinhood also provides a 3% match for contributions made to an IRA while maintaining a Gold account. For every $1,000 contributed to your IRA, Robinhood offers a $30 match. However, there’s a stipulation: you can only retain the matched funds after five years. Despite this lengthy requirement, it represents a solid incentive. Contributing approximately $1,700 to an IRA effectively offsets the Gold membership fee, and higher contributions yield additional matched funds. While Robinhood doesn’t provide robo-advisor services or proprietary mutual funds, it does allow investments in low-cost ETFs, such as those from Vanguard.
6. Do Robinhood Customers Mind Paying Debt?
According to Robinhood’s Q4 2023 quarterly report, net interest revenue surged by 41% year-over-year, reaching $236 million. While specific details are scarce, this revenue likely derives from various interest income sources, including:
- Interest earned on margin loans to customers.
- Interest earned on customer cash balances.
- Interest earned on Robinhood’s corporate cash and investments.
Of these sources, the concern lies primarily with interest on margin loans. Most individual investors have little need for margin loans, which are often more suitable for high-net-worth individuals looking to minimize capital gains taxes. This raises the question: does Robinhood recognize that its younger demographic is open to taking on debt and paying interest? While investing can compound wealth, credit card debt often accrues at much higher rates than stock market returns, leaving those aiming to build wealth in a challenging position.
7. How Much Pressure Will Other Credit Card Issuers Have to Increase Their Rewards?
If the Robinhood Gold Card maintains high credit limits and sustains the 3% cash back offer, it could significantly disrupt the credit card market. For instance, the Citi Double Cash card, which was the first to offer 2% cash back on all purchases, has influenced numerous issuers to develop similar offerings over the past decade. Increased competition has driven credit card companies to provide substantial incentives to attract customers, which is beneficial for consumers. For example, Chase incurred substantial losses when launching the Chase Sapphire Reserve due to its lucrative welcome offer, but the long-term gains from attracting high-spending customers justified the initial investment. I eagerly anticipate how other credit card companies will respond to the Robinhood Gold Card’s 3% offer. Will we see increased bonuses? More cards offering 3% cash back? Only time will tell.