The battle for your savings account dollars heated up this week with Credit Karma launching a high yield savings account that is near the top of the pack.
This incredibly easy to use app-based (and online) savings account offers a near top of the market yield, but also includes easy integration with Credit Karma’s credit monitoring tools.
So, should you consider switching? We’re partnering with Credit Karma to show you why you should put this new online savings account on your radar. Learn more about Credit Karma Savings here >>
What Is Credit Karma?
Credit Karma is a fintech that offers free consumer educational content for increasing your credit score. They also allow consumers to get their credit score and credit report for free. Credit Karma was founded in 2007. Its CEO and founder is Ken Lin.
Credit Karma is not a bank, and this is their first financial savings account product offering. They are most well known for their credit monitoring and credit improvement tools. They also made a splash with their Credit Karma Tax product, which is one of the only free tax software products available.
Read our full Credit Karma review here.
High-Yield Savings Account Rates
Credit Karma’s savings account will offer consumers a 1.30% APY (annual percentage yield). With a national average savings rate of only 0.09% APY, Credit Karma’s rate is over 20X the national average. There won’t be any fees or minimum deposit required to open a savings account.
Many people allow their savings to sit in accounts that earn very little to no interest. A 0.09% APY isn’t even enough to combat the erosion of inflation. Since 2012, inflation has been stuck in a range of 0.1% to 2.4%. At a 2.4% inflation rate, a 0.09% APY has an inflation-adjusted return of -2.31%. For the most part, a 1.30% APY will, on average, help keep inflation from eating away your savings.
“We spent the first 12 years focusing on helping Americans manage their debt. With more than 100 million members around the globe, it made sense for us to jump across the balance sheet with Credit Karma Savings,” said founder and CEO Ken Lin, in a press release. “We want to make savings accessible to every American in the same way we have with credit scores. We look forward to helping our members grow their money with Credit Karma Savings.”
Unlike some of its FinTech competitors, which keep a portion of the savings APY for themselves, Credit Karma sends 100% of the APY back to the consumer.
“One hundred percent of the interest earned is delivered back to the member,” the company told CNBC Make It.
Credit Karma’s savings account can be opened online at their site and accessed through the website and mobile app. The mobile app will allow you to deposit and withdraw funds. It will display the current APY and show how much you can earn through automatic deposits. You’ll also be able to see recent activity and a history of transactions.
Are There Any Fees?
No — Credit Karma will not charge fees on its savings account product, and there is no minimum to open.
How Do I Open an Account?
Visit https://www.creditkarma.com to open an account.
Is My Money Safe?
Yes. While Credit Karma is not a bank, it has partnered with West Virginia-based MVB Bank. MVB Bank is FDIC-insured and will insure deposits up to $5 million.
Is It Worth It?
While 1.30% APY isn’t the highest savings account yield on the market, it is still a good rate.
Credit Karma is a credible and reputable brand. If you already like the brand, that can certainly be reason enough to open a savings account with Credit Karma.
Credit Karma High Yield Savings Account Review
- Interest Rates - 90
- Fees and Charges - 100
- Customer Service - 60
- Ease of Use - 80
- Tools and Resources - 80
- Products and Services - 80
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.