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How can Robinhood afford 3% cash back on its new credit card?

13 点作者 spking大约 1 年前

6 条评论

BobaFloutist大约 1 年前
It&#x27;s, per the article, not really no annual fee, you can&#x27;t get the card without paying them at least $50 a year for an account with them, where the cash ends up (and then you have to figure out how to extract).<p>On top of that the article makes the classic mistake of saying it pays for itself if you spend $166 a month, but it only <i>really</i> pays for itself if the marginal value of using the card over a generic 1.5% cashback card on the things you can&#x27;t get 3% for already is more than $5 a month. Things like high cashback percentages for the first $X a month in specific categories make this intentionally hard to calculate, and are part of why I never really got into optimizing my credit card benefits. It&#x27;s obnoxiously hard to compare.
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idopmstuff大约 1 年前
My suspicion is that this is a bad bet by RH on user acquisition. Specifically, they&#x27;ve modeled the cost of this acquiring a customer this way against their ARPU and determined they&#x27;re going to make money overall. What they&#x27;re ignoring, however, is that they&#x27;re going to get people self-selecting into this offer who don&#x27;t match the profile of their existing users.<p>If right now they&#x27;ve got retail traders who like to trade a lot (and thus give them meaningful revenue) and they can acquire more of those with the economics of this offer, it&#x27;s almost certainly a winner for them. If they instead end up acquiring frugal, credit card churning type folks who aren&#x27;t going to trade on RH at all, it&#x27;s going to be a loser. I bet on the latter.
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dangus大约 1 年前
First off, you should know 2% cash back no questions asked is already pretty much available on a no-fee card (Citi Double Cash).<p>This is effectively a $50 annual fee card.<p>Next, the redemptions have limitations:<p>&gt; 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<p>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.<p>Plus, that account pays no interest like an online checking or savings account does.
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dubcanada大约 1 年前
I am a bit confused, Robinhood is not personally giving everyone 3% cashback, they are taking their profits from credit card fees and giving them to people as a form of cashback. Same as any other cashback credit card. 3% is unheard of but it is not weird for a new player in the market to shack things up by offering a deal for a bit to gain customers, and then dropping it to 2.5% -&gt; 2% -&gt; etc slowly once they have traction.
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MarkSweep大约 1 年前
One revenue source the article does mention is marketing &#x2F; advertising commission they likely get when a card member uses the card to redeem for products or travel. Presumable the merchants pay a commission to appear in the redemption store, as a customer acquisition cost.<p>Also maybe Robinhood sells your purchase data to databrokers? Or maybe that is already done by VISA and they don’t get a cut of that?
Apocryphon大约 1 年前
“Three percent? How can that be profitable for Tenev-Bhatt?”<p><a href="https:&#x2F;&#x2F;youtu.be&#x2F;bYM6tWIjr-I" rel="nofollow">https:&#x2F;&#x2F;youtu.be&#x2F;bYM6tWIjr-I</a>