Robinhood’s Credit Card Offers 3% Cash Back. Can It Last?

Here’s the first thing to know about the new Robinhood credit card that promises 3 percent cash back on all purchases, without limits: Yesterday, when I asked Vlad Tenev, the company’s chief executive, to guarantee that it would stay at that level for 18 months, he would not.

I hope it sticks. It’s incredibly generous as these things go. But cash-back offers from big card issuers like Citibank generally top out at about 2 percent, and it’s hard to make money even at that level. Charles Schwab gave up on its 2 percent card in 2010.

The Robinhood Gold Card is the company’s first credit card with its own branding. So what does it think it knows that nobody else does, and what exactly does it hope to accomplish?

There are several ways to make money with credit cards. The first is from fees merchants pay to accept them. The second is from interest when people carry a balance.

Then there are annual fees, which can be several hundred dollars for the most generous cards. Robinhood’s card has no annual fee, though you must pay $5 per month or $50 per year to be part of the company’s gold program, which offers better interest rates and other perks.

Big-spending system beaters take great delight in moving, say, $100,000 of their annual expenses to a new card; not carrying a balance; earning $3,000 in cash back each year and declaring themselves victors over foolish companies.