Is This 3% Cash Back Credit Card Worth It? – Technologist

What if I told you there was a credit card that would pay you at least 3% cash back on everyday purchases, offered many of the top perks you desire in a credit card, and did it all without an annual fee?

The new Robinhood Gold Card aims to do all of these things.

With a promise of 3% cash back on all purchases and up to 5% cash back on travel purchases, Robinhood is offering some of the best cash back returns available for a no-annual-fee credit card.

But there’s a catch: You must be a Robinhood Gold member to apply. And you need to trust Robinhood with your money after some controversial tactics in recent years.

There is a membership fee involved with that investment subscription, so this card may not be for everyone.

In this article, we’ll walk through the specifics on this new rewards credit card and help you determine if it may be worth a Robinhood Gold membership to acquire it.

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What Is the Robinhood Gold Card?

Robinhood Gold Card is offered by Robinhood Credit, Inc., and is issued by Coastal Community Bank, Member FDIC.

The Robinhood Gold Card is a new rewards credit card that is offered exclusively to Robinhood Gold members. This brokerage membership, which costs $5 per month, offers perks like enhanced APR earnings on non-invested funds. (More on this later in the article.)

The major marketing pitch for the card is 3% back on all purchases regardless of spending category with no annual fee.

You’ll receive these rewards as “points” that can be converted to cash back in your brokerage account at a rate of one cent per point. There are some other redemption methods, but it’s worth noting that straight “cash back” or “statement credit” don’t appear to be options. That means there may be some extra steps required to turn your rewards into cash in your wallet.

But, still, that rate of return is noticeably higher than the 2% back offered by many of the top cash back cards, such as the Citi Double Cash® Card and Wells Fargo Active Cash® Card. It also tops the 2.5% back that the Alliant Cashback Visa® Signature Credit Card offers its top tier members.

This card has more going for it than just a good cash back rate. It also offers perks and benefits that are oftentimes reserved for cards with annual fees.

Those include:

• No foreign transaction fees
• No balance transfer fees (Balance transfers are subject to APR interest)
• Auto Rental Collision Damage Waiver coverage
• Extended Warranty Protection
• Purchase Protection
• Trip Interruption Protection
• Travel and Emergency Assistance

You can read more on the specifics of these Visa-backed benefits here.

Note: This card is currently developing a waitlist for applications. But, eventually, Gold members will be able to apply for this credit card and enjoy it without an additional annual fee upon approval.

What Is Included with a Robinhood Gold Subscription?

Now that you know the specifics on this cash back credit card, you’re probably wanting to know more about the subscription membership that is required in order to apply.

Robinhood Gold is a subscription service offered by Robinhood that has been around for a few years.

There is a $5 per month (or $50 per year) subscription fee, which includes access to the following perks:

• Enhanced earnings on idle cash: Non-invested money that is stashed in your brokerage account will have the opportunity to earn 5% APR during nightly cash sweeps by Robinhood. This money can be FDIC insured on up to $2.25 million by using the $250,000 max with nine partner banks. This enhanced rate compares well to many of the top high-yield savings accounts on the market.
• Money match for IRA deposits: Robinhood Gold markets a money match of 3% on your annual IRA contributions if done through your qualified Robinhood account. There is red tape on this, including subscription requirements and a length of time requirement for keeping your money invested. Check their FAQ page on this for more information.
• Instant deposits for faster investing: Gold members can get instant access to up to $50,000 per day in deposits. For people who are routinely making quick moves in and out of the markets, this could be a very valuable perk.
• Deposit boosts are coming soon: Gold members are also promised to soon earn extra cash via deposit boost when they fund their account. The program isn’t live yet, but it supposedly will add an additional 1% to the amount of money you put into your brokerage account. To earn your full boost, you must hold or invest your brokerage deposits for two years.

Is it Worth Subscribing To Robinhood Gold for the Credit Card?

So, now that you know what Robinhood Gold is and you’ve seen the perks of the credit card, you’re probably wondering if it’s worth signing up to get access to the card.

If you’re not already a Robinhood user, this likely depends on your willingness to move around some savings or investment funds. And your appetite for doing business with Robinhood after some frustrating and unsettling headlines in recent years.

Money expert Clark Howard is generally not a fan of Robinhood and does not recommend signing up for Robinhood just to get this credit card.

He believes it could be an option for existing customers, but that there is too much risk that Robinhood could decide to alter the rewards program after sign-up for people to seek new membership just for access to the credit card.

But if you’re still on board, let’s take a look at some of the ways you could “offset” the $50 annual fee associated with Robinhood Gold to access the 3% cash back from the credit card.

Focusing on one or more of these methods to offset the subscription fee could make the Gold credit card seem like a good deal.

1. Holding Some Savings in the Brokerage Account

Perhaps the easiest way to offset the Gold membership fee is to set aside some of your idle savings cash in the brokerage account to accrue interest on the nightly cash sweeps.

If the advertised 5% APR remains an option, you could hold as little as $1,000 in savings to earn the $50 in interest necessary to offset the $50 price for an annual subscription.

Of course, you may want to consider moving more than $1,000 to that account if the 5% APR is better than what you’re earning in your existing savings account. As of this writing, the national average for savings account APR was hovering around 0.5%.

2. Grab an IRA Contribution Match

If reading about this offer has inspired you to take a step forward in your retirement investing, that’s great!

Accessing the 3% IRA contribution match offered to Gold members could be a great way to offset the annual subscription fee.

For a point of reference, 3% of a $1,700 contribution is $51.

3. Spend with the Card in High Volume

If you’re not interested in holding money with Robinhood, there’s still a way that you could justify paying the Gold membership fee to gain access to the credit card.

Effectively, you’d need to treat this card as though it has a $50 annual fee. So to make it worth it, you’d need to spend $1,700 per year with the card to cover the annual fee. From there, any rewards you earned at 3% would be “profit.”

If you’re wondering whether it’s better to pay the fee for this card instead of simply enjoying a 2% cash back card with no annual fee, the breakeven point would be $5,000 in annual spending for the annual subscription price and $6,000 for the monthly subscription price.

Here’s a table breaking down the cash back that can be earned at 3% versus using a 2% card:

Final Thoughts: Pros and Cons

Are you considering adding the Robinhood Gold Card to your wallet? Let’s review some of the major pros and cons of the card before you make your final decision:

Bottom Line: If you are in the market for a new cash back credit and already do your investing with Robinhood, this card could be a no-brainer addition to your wallet. This is especially true if you’re already paying for Robinhood Gold membership.

However, consumers who are not currently investing with Robinhood may have a more difficult decision. You’ll need to weigh whether the perks involved are worth putting a portion of your money into the Robinhood ecosystem.

Clark recommends that you avoid this hassle and stick with a different cash back credit card.

After all, there are plenty of good rewards credit cards on the market that don’t require you to move your investments around to earn rewards.

I believe this card is worth it if:

• You’re already comfortable with Robinhood and are investing some of your money there.
• You plan to spend at least $6,000 annually with the credit card.
• You have a willingness to book travel through Robinhood’s portal to earn 5% back.

Are you a Robinhood customer? Would you consider adding this credit card to your wallet? We’d love to hear your thoughts in the Clark.com community.