Robinhood’s new debit card will automatically invest in stocks and crypto as you spend

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Robinhood has announced a new debit card, branded as Robinhood Cash Card. The card will be linked to a separate spending account from users’ brokerage accounts and will work for in-person and online payments as well as ATM withdrawals. The new card will replace Robinhood’s current Cash Management debit card, originally announced in 2019.

The big new feature of the card is the ability for users to automatically invest in assets such as stocks and cryptos when they spend money. Robinhood will round up transactions made using the card to the nearest dollar and use this extra money to purchase assets chosen by the user. So you could spend $10.55 on a bowl of burrito with your credit card, and Robinhood will round the payment up to $11 and use the extra $0.45 to buy Dogecoin or Ethereum (if you want).

Similar “spare currency” investment features are already offered by companies like Acorns.com and Stash.com.

To incentivize the use of this feature, Robinhood will give people an additional 10-100% of their weekly roundup money (capped at $10 per week). In an interview with The edgeit’s decoder podcast, Robinhood chief product officer Aparna Chennapragada said the exact figure provided by the company would be determined by a “variable reward algorithm”.

Chennapragada said the summary feature “incentivizes people to do more of the right thing. Again, that [money] can be invested in cash, crypto, stocks, expenses, etc.

Chennapragada didn’t say whether users would be offered insight into how the reward algorithm works, and that may turn out to be a slightly controversial feature. Random reward mechanisms are often denounced for their addictive nature – they encourage users to continue playing in casinos or video games, for example. And while giving users a few bucks isn’t inherently dangerous, for Robinhood critics (who say the company encourages dangerous trading habits), it could be another example of the company’s playful investment in this. which can be risky and volatile markets.

The main feature of the card is automatic investment based on rounded payouts.
Image: Robinhood

Other features of Robinhood’s new debit card include unspecified “extra rewards and cash back” at select stores (Robinhood says these will include H&M, Chevron and Chipotle, but didn’t say when the savings will be available or what size they will be). Users will also have the ability to send their paycheck to their account via direct deposit and access funds “up to two days early” and automatically invest a portion of that deposit in chosen assets.

The card has no subscription fees, no account minimums, no overdraft fees and no in-network ATM fees. It’s unclear which network Robinhood uses for the debit card, but its previous cash management card used Mastercard.

Talk to decoderChennapragada said the company wanted to update its debit card rather than launch a credit card due to changing consumer habits, especially among younger Gen Z consumers.

“Many more young people are in debt, first of all, either because their credit score is not built up or, with the credit card companies, they can see how they can get bogged down, they want better control their cash flow,” Chennapragada said. “So we said, ‘Why wouldn’t the debit card or a cash card have the same kind of rewards? And on top of that, actually put an investment line of sight. Which no one of these products no one today allows you to do.

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