Robinhood revolutionized investing for retail investors (every-day people) by allowing free stock trades. Just as Charles Schwab had done decades earlier in becoming the first discount broker.
After enduring some up-and-down years and weathering some controversies, Robinhood has returned to its innovative ways — at least when it comes to marketing. Robinhood Gold has become a focal point for the recent features the company has rolled out as it matures and tries to expand its offerings.
Not since the Fidelity Zero funds have we seen an investment company go so hard offering benefits to attract new clients, or to convert free users to paid users.
How does Clark feel about Robinhood Gold? And is it worth the price tag?
Is Robinhood Gold Worth the Cost?
Should I pay $5 a monthly fee, a $50 annual fee or ignore Robinhood Gold altogether?
That’s what a Clark Howard listener recently asked.
Asked Stephany in Indiana: “What do you think of the Robinhood Gold membership? Is $5 a month worth it?”
I’ll get into more detail about what features you get along with Robinhood Gold in the next section. First, let’s get Clark’s opinion. He recently mentioned in a podcast that he doesn’t trust Robinhood as far as he can throw them. But he gave as close to a neutral answer on Robinhood as I’ve heard from him.
“The [price] is not a lot. If you’re happy using Robinhood and you use the services that come with Gold, go ahead,” Clark says.
“Robinhood is a company you don’t hear me say nice things about. But there are many people who use Robinhood who are very happy with it. And if you’re pleased with the services you’ve gotten, Stephany, then I’d say go for it.”
What Does Robinhood Gold Give You?
Again, Robinhood itself is free. If you want to upgrade to Robinhood Gold, you can either pay $5 a month ($60 a year) or you can pay $50 annually and save $10.
Keep in mind you can also try Gold for free for 30 days (but you may need to cancel before the end of that period to avoid a charge).
Here are the features that Robinhood Gold gives you access to:
- 5% interest on your uninvested cash. This rate is comparable to the best online savings accounts.
- 3% cash back on a Robinhood Gold credit card. That’s 1% better than the traditional 2% cash back rewards credit card. Our credit card writer Nick Cole broke down the math in the linked story. If this is the only Robinhood Gold feature you use is the 3% cash back card, and you could otherwise use a 2% cash back card, you’d need to spend $6,000 a year on this card to break even considering the annual fees.
- 3% match for IRA contributions and 1% match for transfers and rollovers. That’s right: Much like a 401(k) employer match, Robinhood will contribute to your IRA in a similar fashion. The contribution limit for 2024 is $7,000 if you’re under 50. So if you contribute the full amount, Robinhood kicks in $210. And if you roll over a $500,000 401(k) into a Robinhood IRA, you’ll get $5,000. The fine print: “You must hold eligible contributions in your IRA for at least 5 years to keep the match, and remain a Gold member for at least 1 consecutive year from the date of your first 3% match.”
- Additional investing benefits. You’ll get bigger instant deposits with Robinhood Gold. That’s the amount of money you pull in from a bank account that you can invest immediately before the transaction clears. Gold also gets you access to Morningstar research, Level II market data from Nasdaq and margin investing at 8%.
Why Robinhood Gold May Not Be a Fit
Just like any financial subscription with benefits, the details matter.
For example, if you’re just moving your IRA to Robinhood temporarily to pick up a few hundred dollars in match funds, you may not realize you’ll lose the funds if you don’t meet the five-year rule I mentioned above.
And if you’re using the 3% cash back credit card, you need to account for the annual cost of Robinhood Gold vs. what you can get in rewards for a free 2% cash back card.
Also, there’s a question of sustainability. In combination, the IRA match, 3% cash back credit card and 5% interest are a sweet deal. But it’s fair to be skeptical that all these great incentives won’t last forever. Or that Robinhood will increase the price of its Gold memberships over time.
The potential impermanence is one of the biggest downsides that Clark recognizes.
“Robinhood has had a lot of operational difficulties. They’ve done a lot of U-turns. And recently when they came out with the new 3% cash-back card that you have to be a Gold member to have, I didn’t exactly do cartwheels about this incredible 3% cash back,” Clark says. “Because I’m not excited by Robinhood.”
Final Thoughts
Robinhood Gold offers a trifecta of competitive rates on savings, IRA contributions and credit card rewards. That’s totally excluding the investment features.
Just do the math and make sure you’ll more than earn your subscription fee by making use of those features. And know that the current rates and prices may be temporary. Robinhood could make Gold memberships less attractive over time after securing market share.
