Eight months after acquiring the startup X1 for $95 million, Robinhood announced the launch of its new Gold Card, with a list of features that might even make Apple Card users envious.
Robinhood, best known for its brokerage app aimed at the everyday investor, is promoting all kinds of benefits with its new card in an attempt to attract users. The card has no annual or foreign transaction fees. However, it will only be available to Robinhood Gold members, which costs $5 per month or $50 per year. (Robinhood gold is a program that offers other benefits such as 5% APY on an account's uninvested brokerage cash).
Gold Card users can earn 3% cash back on all categories, including restaurants and groceries, and 5% cash back when booking travel on Robinhood's new travel portal. That cash back can be transferred to brokerage accounts, which can be put toward investments such as buying stocks, the company says. The ability to invest using cash back is the big innovation that X1 developed before being acquired.
Another cool feature of the Gold Card includes the ability to provide cards for family members. This is the first time Robinhood has introduced a family-oriented financial product, said Deepak Rao, CEO of Robinhood Money. Rao was the founder and CEO of X1 before joining Robinhood in the acquisition.
Users will have the ability to add up to five family members as cardholders to their account and each cardholder will receive their own card. Additional cardholders can be of any age, giving parents a way to help teens build credit and control their spending. The possibility of providing cards to family members will be extended even to those visiting the country from other countries.
“A user can provide cards to parents, children or caregivers and put in place the right kind of controls and protection, while helping them build their credit,” Rao said. “They do not have to provide any information other than their name, date of birth and Social Security number, if they have one. If you're worried about spending limits, you can set a dollar amount limit and also a kid-safe mode.”
The Card also allows users to create and delete virtual cards for one-time purchases and will have an APR of 20,24% to 29,99%, which Robinhood says will vary by market depending on the Prime rate.
Robinhood is also making its physical cards innumerable, so if they are lost or stolen, users won't have to change all of their card information. The company is also launching a new app along with the new Gold Card that will be completely separate from its investment app, Rao said.
Typically, the Gold account offers up to $2,25 million of FDIC insurance from a network of partner banks.
Refund of money
Robinhood's entry into the credit card market clearly follows the lead of companies like Apple, which has seen great success with its own card, despite setbacks with its partnership with Goldman Sachs. By waiving hidden fees like annual or late fees and applying your cash back daily, Apple Card surpassed 12 million users as of January.
Many cards offer cash back, but they often restrict it to certain categories. This card is generous in its cash back offer. Apple, for example, offers 3% cash back on all purchases made at Apple and on purchases made at select merchants when using the Apple Card with Apple Pay. Generally, purchases made with Apple Card with Apple Pay earn users 2% cash back. But Apple also offers a Family Sharing feature and a high-yield savings account that offers 4,5% interest.
Obviously, Robinhood will earn revenue from credit card trading and standard transaction fees paid by traders. It had already earned exchange revenue thanks to its debit cards launched in 2018. Coastal Community Bank is Robinhood's banking partner on the new Gold Card.
The new credit card is part of the evolution of Robinhood's business model and offerings over the years. In December 2022, the company announced Retirement Robinhood, which it described as the “first and only” individual retirement account (IRA) with a 1% match for every eligible dollar contributed. Gold Membership, a requirement to obtain the Gold Card, increases the eligible contribution by up to 3%.
Robinhood Gold Card, Explained:
What are the requirements to apply for a Robinhood Gold Card?
Must be a Robinhood Gold card member. You must first meet the following requirements to be able to request a card:
- Have a Robinhood Gold account.
- Be 18 years or older
- Have a valid social security number (not a taxpayer identification number)
- Have a legal U.S. residential address within the 50 states (exceptions may apply for active U.S. military personnel stationed abroad)
- Be a US citizen, US permanent resident, or have a valid US visa
- Are there monthly fees associated with the Robinhood Gold Card?
- You must be a Robinhood Gold member to apply for the card. It costs $5 a month, or $50 a year, to become a Robinhood Gold member.
Are there foreign transaction fees associated with a Robinhood Gold card?
No, there are no foreign transaction fees.
Will credit be removed when applying for a Robinhood Gold card?
Robinhood doesn't make much of an effort with credit until you accept the card offer.
What are the advantages and cash back benefits of this card?
- Users can get 3% cash back on all categories. That cash back can be transferred to brokerage accounts, which can be put toward investments such as buying stocks.
- Users will have the ability to add up to five family members as cardholders to their account and each cardholder will receive their own card.
- Cardholders can create and delete virtual cards for one-time purchases.
- Physical cards will not have numbers, so if they are lost or stolen, users will not have to change all of their card information.
Is Robinhood Gold FDIC Insured?
Robinhood offers up to $2,25 million in FDIC insurance through a network of partner banks.
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