Robinhood has announced that they will be releasing an unlimited 3% cashback card, and the credit card world went wild! But will the 3% cashback really be 3% cashback? Will it last? Let’s explore.

Do we know how long they will keep it at 3% cashback?

No! Robinhood has not promised for how long they plan on keeping it at unlimited 3% cashback. In an interview with the NYT about the card, the CEO refused to answer if the 3% cashback will still be available in 18 months from now. 

Look at the terms

In the terms & conditions, Robinhood clearly states that Robinhood has the right to change the 3% cashback rate at any time.

This is the exact copy-paste: 

“Robinhood may make changes to the Rewards Program (including termination of the Rewards Program) or change the terms of this agreement at any time. For example, Robinhood may:

• Add new terms or delete terms
• Change how you earn points, or how many points you can earn for eligible purchases
• Change how you redeem points
• Change what you can get with your points
• Impose caps and/or fees on earning and/or using points

Robinhood may not always provide notice when it changes what you can get with your points or how your points can be redeemed. You understand and agree that Robinhood can make these changes at any time. You can see what you currently can get with your points when you visit the “Rewards” tab in the Robinhood Credit Card mobile app. Future availability of certain aspects of the Rewards Program, including specific Rewards Merchants and redemption items, is not guaranteed.”

Why did it not work with the X1 Card?

If Robinhood believes they can make money even with an unlimited 3% cashback card then why did it fail on the X1 Visa Card (that they own)? Why did X1 put caps? 

X1 started out as an unlimited 3% cashback card and later changed and put restrictions.

On the X1 Visa Card you currently only earn 3 points  if you spend $1,000 or more per month. You will earn the 3 points on the next $6,500 you spend in that month (so basically $1 -$1,000 earns 2 points, $1001 – $7,500 earns 3 points, and $7,501 and up earns 2 points).

You need to spend $1,000 to get to the 3x threshold so if you are able to max out each month the full $7,500 then your overall reward rate is 2.87, but if you don’t max out the $7,500, your overall rewards rate will drop to far less than 3%.

A few quick examples would be:

• If you spend $4,000 a month then your overall rewards rate is 2.6%
• If you spend $2,000 a month then your overall rewards rate is 2.5%

So if unlimited 3% cashback did not work for the X1 Visa Card (that they currently own),  why does Robinhood think it will work for the new Robinhood Gold card?

The answer lies under the gold

In order to be able to get the Robinhood Gold card you need to be a Robinhood Gold member which costs $5 per month ($60 per year). 

I don’t think they really are planning to offer a long-term unlimited 3% cashback. The CEO said that he doesn’t know if in 18 months from now Robinhood will still be offering the unlimited 3% cashback but one thing he does know is that at that time he will have a whole lot more Robinhood Gold members and ultimately, I believe that is the marketing stunt here.

What will happen to the Robinhood 3% cashback card?

It will either turn into a 2% cashback card, or like with the X1 card, it will be extremely capped.

Should you enjoy the ride while it's here?

I’m all about enjoying a ride while it’s here.

I would definitely be excited to earn unlimited 3% cashback at least for the months that it will be available. That’s why I joined the waiting list. But before I apply I would first wait to get answers on the following:

• What credit limits will they approve? It is only worth it if I get a solid credit limit and I’m able to maximize the 3% cashback
• Which protections will the card have? I will need a good dispute resolution team and basic benefits like purchase protection, extended warranty protection, etc. 
• And a dream that the 3% cashback should last a minimum of one year so that I can maximize enough points so that it was worth the credit card slot on my credit report (I do think it will last a minimum of one year).

Join the waiting list >>