Robinhood (NASDAQ:HOOD) is a financial services firm renowned for its commission-free trading app. However, the company recently introduced its inaugural credit card, the Robinhood Gold Card, which the company hopes will alter the cash-back card landscape. Exclusive to Robinhood investing account holders with a Robinhood Gold membership, it promises enticing cash-back rates. This Robinhood Gold card review will delve into the details.

The said card promises a minimum of 3% cash back on all purchases, setting it apart from traditional credit cards with capped rewards. Despite being labeled as a no-annual fee, it’s exclusively available to Robinhood Gold members at $5 per month or $50 annually. Though applications have yet to be opened, interested individuals can join the waitlist for this distinctive card.

For a $5 monthly fee, Robinhood Gold enhanced brokerage accounts with multiple benefits, including increased cash interest, higher instant deposit caps, a 3% IRA contribution match, Morningstar research access, Level II market data, and reduced margin rates.

Our Robinhood Gold card review evaluates if the benefits justify the subscription fee.

Not Your Ordinary Cash-Back Credit Card

In the competitive credit card market, high flat cash-back rates are essential for maximizing rewards on every purchase. Cards offering a base rate of 2% to 2.5% are standard, but the Robinhood Gold Card stands out with 5% cash back on travel booked through its portal and 3% on all other categories. 

For instance, switching to a card offering just 1% more than the current one could yield an additional $250 annually for a $25,000 spender, potentially leading to significant savings or investments.

The Robinhood Gold Card is exclusively available to account holders who subscribe to Robinhood Gold. This limits its appeal to those not interested in opening a brokerage account or who prefer other brokerage firms. 

However, for existing Robinhood users considering a Gold membership, the card’s benefits may justify the $75 annual or $6.99 monthly fee. Users can offset these fees with just $233 in monthly purchases with cash-back rewards. 

Moreover, additional cash back can aid in achieving saving or investing goals, complementing Robinhood Gold’s features like a 5.00% APY on idle cash and a 3% match on IRA contributions. This is a crucial part of this Robinhood Gold card review.

Excellent Flat Cash Back Rate in the Market

The primary allure of the Robinhood Gold Card lies in its impressive base cash-back rate: a consistent 3% back on all purchases. While it also offers 5% back on travel booked through Robinhood’s travel portal, details on this aspect still need to be improved. Regardless, the 3% cash–back rate is far better than other cards’ flat-rate cash-back offerings in the market, which only gives 2%.

To attest to the 3% cash back rate, Bankrate’s senior expert Ted Rossman emphasized this is an advantage for Robinhood in leading the market. Such a competitive rate has raised questions among industry experts about how Robinhood will sustain it.

Despite its appealing 3% cash-back rate on all purchases, the Robinhood Gold Card requires a $50 annual or $5 monthly membership fee. To surpass competing 2% flat-rate cards, one must spend at least $5,000 annually on general purchases, equating to approximately $416 per month. However, this threshold makes it a more advantageous option, considering its universal cash-back benefits on everyday expenses.

Impressive Benefits

In standard Robinhood accounts, users with instant deposits enabled can access up to $1,000 immediately, regardless of their account balance. However, Gold card holders can have more instant deposit limits depending on how much their portfolio is worth.

Here is how it works:

• A limit of $5,000 is given for portfolios <$10,000
• A limit of $10,000 is given for portfolios <$25,000
• A limit of $25,000 is given for portfolios <$30,000
• A limit of $50,000 is given for portfolios $50,000 and more.

Moreover, Robinhood offers a generous 1% match on contributions from customers opening a Roth IRA account without the Gold card. Essentially, if a customer contributes $1,000 to their Robinhood IRA, they receive a $10 “bonus” from Robinhood. Conversely, Robinhood Gold members receive a 3% match on their contributions, including IRA transfers and rollovers until April 30, 2024. This match presents significant potential value for those who max out their IRA contributions annually.

Additionally, Robinhood Gold enhances the brokerage platform with valuable features, including access to professional research reports on over 1,700 stocks from Morningstar. These reports provide insights into a company’s strategy, competitive advantages, and risks, aiding investors in making informed investment decisions.

Subscribers can also access Nasdaq’s Level II market data, offering valuable insight for active traders and those employing technical analysis in their investment approach. This feature provides visibility into current bid and ask prices, aiding in strategic decision-making.

Accessing lower margin rates can be advantageous for investors. Robinhood Gold subscribers enjoy an 8% margin interest rate, while non-members face a higher 12% rate. It’s essential to note that Robinhood’s margin rate fluctuates based on the Federal Reserve’s target range for the federal funds rate.

Bottomline

If you’re a Robinhood Gold user, joining the waitlist for this card seems logical, offering solid earning rates and redemptions. Its new credit card offers impressive rewards, including the best flat rate available, despite requiring a Robinhood Gold membership. While tempted, caution is warranted due to potential changes in rewards and lingering concerns about the platform’s past conduct.

However, for most, it might be more style than substance. A welcome bonus is necessary in a competitive market. Paying $50 to $60 annually for Robinhood Gold may not justify the extra 1% earnings compared to a 2% cash-back card. It all really depends on how much you spend, and if you pay your card off in full every month. This concludes this Robinhood Gold card review.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.