Mar 26, 2024 - Business

Robinhood launches 3% cash back credit card

Illustration of Robin Hood with a credit card in his hat instead of a feather.

Illustration: Shoshana Gordon/Axios

Robinhood unveiled its first-ever credit card, the Robinhood Gold Card, during a first-ever product keynote event in New York City Tuesday night.

Why it matters: The retail trading firm is entering a competitive and convoluted space with a card that offers 3% cash back on all categories.

The big picture: Robinhood hopes that an attractive credit card product will draw people in to use all of its services.

  • "What I predict we'll see is a significant number of customers that join for the credit card and then become investors," CEO Vlad Tenev told Axios in an interview ahead of the news.

How it works: There's no annual fee for the card, but it will require a Robinhood Gold membership, which runs $5 per month, or $50 annually.

  • Features, in addition to the 3% cash back, include no foreign transaction fees, a companion app that makes it relatively simple to create virtual and one-time cards, and the ability to set up cards for up to five family members with spending limits.
  • Robinhood Gold, meanwhile, gives investors additional benefits, such as 5% APY interest on uninvested cash and a 3% match on Robinhood Retirement IRA contributions.

To help spark interest in the new card and to grow Gold subscriptions, the company is also offering a solid 10k gold version of the credit card to the first 5,000 users who refer 10 friends who sign up for memberships.

My thought bubble: The 36-gram card was fun to hold during a demo and would no doubt be a conversation starter, but I would be worried about losing it or having it stolen.

The intrigue: The new card is issued by Coastal Community, but it's Robinhood itself that will assess applicants based on credit scores and income.

  • Doing so allows Robinhood to make its decisions "more holistically," according to Deepak Rao, who oversees Robinhood Money and Robinhood Credit.

That's a different approach than others, such as Apple, where Goldman Sachs has been responsible for underwriting its credit card.

  • Tenev added that while there's nothing "wrong" with Apple's path ("because it probably speeds up time to market and you get specialized skills from both companies"), Robinhood doesn't have to "split" the economics "into so many pieces."

Flashback: Rao previously led X1, a no-fee rewards-based credit card company.

  • Robinhood acquired X1 last year and a credit card launch was largely expected.

Ultimately, the goal for Robinhood is to become the "primary financial institution" for its customers, Tenev said.

  • "All of their assets should be custodied at Robinhood. And all their financial transactions should go through Robinhood," he said.

Axios Pro's Lucinda Shen and Ryan Lawler contributed to this report. Sign up for their Fintech Deals newsletter here.

Go deeper