Robinhood launches credit card to entice premium customers

Robinhood Markets has unveiled a new credit card, targeting its Gold customers in a bid to deepen its roots in the personal finance market and encourage more subscriptions to its premium service.

The new product was announced on Tuesday, and it follows the Menlo Park, California-based online trading app’s strategy to diversify its product range, including the launch of a debit card two years ago aimed at enabling spare change investing.

Robinhood Gold Card features no annual or foreign transaction fees and offers up to 3% cash back on purchases and 5% on bookings through Robinhood’s travel portal. This expansion comes in the wake of acquiring fintech startup X1 Inc for $95 million last year to establish itself as a comprehensive financial services provider amidst the rising popularity of digital banking and fintech firms.

Such diversification could offer Robinhood a buffer against market fluctuations, highlighted by the retail investor retreat following the Federal Reserve’s interest rate hikes in 2022. The company has initiated a waitlist for the new credit card, with plans for a broader rollout later this year.

Additionally, Robinhood’s assets under custody have grown 59% year-over-year as of February, with a notable increase in options contracts trading.

The trend extends to cryptocurrency trading as well. Despite a previous downturn in the crypto market, Bitcoin’s recovery, with a 75% increase this year, has revived interest in digital asset trading.

Robinhood reported $6.5 billion in crypto trading volumes for February, up 10% from January and 86% from the previous year. This rebound in crypto trading is crucial for Robinhood, as it tends to be more profitable than stock trading.

For Coinbase, the growth in crypto trading volumes at Robinhood suggests a healthy market for retail crypto investors, despite competition from new spot Bitcoin ETFs, which have seen massive inflows and higher trading volumes since their introduction.

Robinhood also highlighted its expansion into the European market and the integration of its wallet on-ramp with MetaMask as it seeks to be a bridge between traditional finance and crypto markets.