Comment by dangus
2 years ago
First off, you should know 2% cash back no questions asked is already pretty much available on a no-fee card (Citi Double Cash).
This is effectively a $50 annual fee card.
Next, the redemptions have limitations:
> The cash back has limitations as to how it can be redeemed — (1) purchases at select merchants directly through Robinhood’s shopping portal; (2) booking travel through the travel portal; or (3) redeeming as cash to be deposited in the Robinhood brokerage account, which is set up automatically
So that means that you can put cash in an account that’s going to tempt you to invest with Robinhood, which makes them money. There is at least some friction to withdrawing it and that withdrawal doesn’t happen automatically.
Plus, that account pays no interest like an online checking or savings account does.
I use the PayPal Cashback Mastercard (2% back on everything, 3% back on PayPal purchases, no annual fee). It deposits the cash back into my PayPal account, but I'm also able to make card payments from my PayPal account, so I typically just redeem it every month and then immediately pay it back onto the card account before I pay the rest of the balance off normally.
I wonder if the Robinhood setup will allow making card payments from the brokerage account like that?
For the PayPal card, they honestly did get me to start clicking the PayPal checkout button on websites instead of the credit card button when they added the 3% back on those in 2022 (which incidentally made dispute resolution way easier once when I ordered from a no-name website that never shipped my order or responded to inquiries, since I was able to handle it via PayPal purchase protection rather than a credit card chargeback). Aside from that, I haven't been tempted to use any of PayPal's other services-- and Robinhood doesn't have a checkout system AFAIK, so they can't pull that one off.