Is Robinhood A Scam?
Is this a bait and switch?
I don’t tend to pay too much attention to new offers unless they’re on the edge of being too good to be true. So I’m excited about but also skeptical of the new Robinhood (HOOD) Gold deal. There’s lots to love but at the same time lots to question. They seem to be offering above market deals for customers. Either this is a cinch that we should take it, it is a scam, or something in the middle. The market for credit card cash back from competitors such as SoFi has historically been around 2%. So Robinhood’s new Visa’s (V) 3% is costing them a lot more than the competition. Is it legit? Yes. I’m confident that this isn’t a scam and that management fully intends to honor this offer. Is it sustainable? I’m far less sure about that. Arbitrage kills arbitrage. My intention is to get the card, milk it for all it is worth, then not get too disappointed if it reverts closer to the market average over time. We already know that the IRA transfer offer expires in less than ten days. The unlimited 3% cash back could have an expiration date too.
Robinhood leapfrogged into the credit card business by acquiring X1 for $95 million. X1 co-founders Deepak Rao and Siddharth Batra will run credit cards for Robinhood. Their business model focused on determining eligibility weighted more towards income than credit score. It is reasonable to presume that they will look to Robinhood account data at improving how they allocate credit. I want a very high limit so that I can use the card for account opening and for paying taxes.
TL; DR: Reserve your spot today. Sign up for Robinhood Gold. Enjoy it while it lasts, then move on to the next opportunity once this one is gone.
