Credit Karma Savings Review
Online banks are popping up everywhere, and for good reason. Simplicity, amazing tech, low fees, high interest, convenience, you get the picture.
Credit Karma recently entered the online banking arena with their Credit Karma Savings account.
Should you open a Credit Karma Savings account? Our full Credit Karma Savings review tells all below, so keep reading.
What is Credit Karma Savings?
Credit Karma Savings is Credit Karma’s first venture into the banking world. It’s a high-yield online savings account that emphasizes simplicity and consumer-friendliness.
A bit of background: Credit Karma is a popular credit monitoring site where you can check your credit score and report as many time as you want with no penalty. Based on your score and history, they recommend various credit cards and other debt products they think you’d qualify for.
They also have endless education resources and tools for many things personal finance-related, not just credit.
And now, they’re in the banking business with Credit Karma Savings.
How Does Credit Karma Savings Work?
Credit Karma Savings is an online high-yield savings account.
Technically, it isn’t Credit Karma that holds your money, though – Credit Karma has partnered with a West Virginia-based bank called MVB Bank (fully FDIC-insured and everything). Credit Karma lets you open and manage your account directly on their site or app, but their bank partner actually holds your money.
Also, Credit Karma works with a network of around 800 other banks for further support to provide the best possible banking experience.
Now, let’s get to the details.
Credit Karma Savings pays a healthy 1.90% APY on your savings, which matches or beats inflation some of the time. It’s not the highest APY in high-yield banking, but it certainly beats a fair amount of the competition like Betterment, Wealthfront, and SoFi
Plus, Credit Karma says they’ll use technology to adjust their rates to stay competitive. Not only does this maximize your interest earnings on your deposits, but you don’t have to constantly monitor interest rates for a better deal elsewhere.
You must be a Credit Karma member to open a savings account (see the end of this article for how to sign up for Credit Karma – it takes seconds).
Credit Karma members have a dashboard screen that summarizes important credit score information; when you open a savings account, your account balance will be displayed above your credit score so you don’t have to navigate to a separate banking screen.
Because of this, Credit Karma has become a powerful financial tool. You can see several types of financial information with one login and one screen.
In addition, Credit Karma plans on adding a feature that shows how your account can grow with deposits in order to incentivize account holders to make consistent deposits and build their savings.
Credit Karma Savings’s Fees
One of the main advantages online banks have over their brick-and-mortar counterparts is a lack of fees (or at least less numerous/expensive fees).
Credit Karma Savings has, in their words “no fees, no penalties, no catch”. No monthly maintenance fees, overdraft fees, or anything else. This also means no minimum balance nor minimum opening deposit; you can open your own account with as little as a penny.
So while that APY might not be an industry leading 2.20% or something similar, you never have to worry about your account getting hit with unforeseen fees.
Our guess as to how they can afford to go fee-free is that they make enough income from their other operations to not need any extra from charging you fees.
Is Credit Karma Savings Safe?
Online banking is still in its infancy compared to traditional banking, so safety is a common concern.
But Credit Karma has the full complement of banking safety and security features. For one, it’s FDIC insured, not up to $250,000, but up to $5 million, made possible by the fact that your deposits are spread among a network of banks, rather than a single bank.
Credit Karma doesn’t provide encryption information specific to their savings account, but they do say that everything on their site uses 128-bit or higher encryption to keep your data safe.
They already have your personal and credit information and keep it safe. If they identify any suspicious behavior in any of your credit accounts, they alert you immediately so you can take action.
With this in mind, they’ll definitely extend that same level of protection to your money.
Who Should Use Credit Karma Savings?
Credit Karma Savings works great for one obvious audience: Credit Karma users. Having your savings information in the same place as your credit information makes financial decision-making just a little more convenient.
That being said, this isn’t the highest-paying APY account out there, despite it’s great rate. We think it’s best for either an emergency fund, a sinking fund, or for someone without much money who’s new to banking and saving.
For the former, the solid interest rate gives you a boost towards your savings goals, while the absence of fees minimizes unnecessary financial losses.
For the latter, it takes $0 and only a few clicks to get your account set up, which we’ll cover in the next section.
How to Set Up a Credit Karma Savings Account
To open a Credit Karma Savings account, you first must be a Credit Karma member. This doesn’t take long – make a username and password, give them some important personal information, confirm your identity, and you’re done.
Once you’re a member (or if you already were), opening the savings account is just as easy as creating a Credit Karma account. Credit Karma asks you to confirm information like your Social Security number, mailing address, and sometimes the email address and phone number associated with your Credit Karma account.
Should all go well, you then review their disclosures/terms/other important documents. Agree to those, and your account should be up and running right away. You’ll know you’re all good if you can see your current balance.
Remember, Credit Karma requires no minimum opening deposit or balance, so don’t worry about preparing an initial deposit. That being said, you should have a plan to deposit money right away; the sooner you deposit, the sooner you start earning that generous 1.90% APY.