Financial services company Robinhood Markets Inc. rolled out a new debit card that allows users to invest their spare change automatically. The Robinhood Cash Card, launched on Tuesday, will allow spare change investing, will be associated with a spending account separate from users’ brokerage accounts and will be valid for in-person, online, and ATM withdrawals.
The new card will take the place of Robinhood’s current Cash Management debit card, which was first announced in 2019. The card’s most notable new feature is the option for users to automatically invest in assets such as stocks and cryptocurrency when they spend money.
Robinhood will round up card transactions to the nearest dollar and use the extra money to purchase assets selected by the user. So, if you spend $10.55 on a burrito bowl with your Cash Card, Robinhood will round the payment up to $11 and apply it to your account, and use the remaining $0.45 to buy Ethereum or Dogecoin.
According to the company, which is known as a pioneer of commission-free trading, users of this feature will also receive a weekly bonus. Robinhood Money, the online brokerage’s new subsidiary, is offering the card.
Other consumer finance apps, such as Chime and Acorns Grow Inc, allow for spare change investing, which allows users to invest small amounts of money and is especially appealing to younger consumers.
Customers will also be able to receive paychecks up to two days in advance via direct deposit, a feature also provided by PayPal Holdings Ltd. The company also stated that these new features would be provided at no cost. There are no subscription fees, no account minimums, no overdraft fees, and no in-network ATM fees with this card.
The network Robinhood is using for the debit card is unknown, but its previous Cash Management card used Mastercard.
To encourage people to use this feature, Robinhood will give them an extra 10% to 100% of their weekly round-up money (up to $10 per week). Aparna Chennapragada, Robinhood’s chief product officer, has reportedly stated that the company preferred to update its debit card rather than launch a credit card due to changing spending habits, particularly among younger, Gen-Z consumers.
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