[Update January 2021: The Credit Karma Savings account starts the year offering 0.30% APY. Down from 0.40% APY in December of 2020.]
You probably know of Credit Karma for pioneering the ‘free credit report’ back in 2007 which gave consumers access to their credit scores from the three major credit bureaus at no cost.
Perhaps you may not know, however, that as of October of 2019, Credit Karma entered the online savings account game with their high yield savings product.
Today, their high yield savings account is still quite popular, easy to open and comes with a solid APY (annual percentage yield) relative to the current national average.
To see if this product is right for you, continue reading our comprehensive review below.
Credit Karma High Yield Online Savings Account Rate + Details
There is no minimum deposit required to open Credit Karma’s online savings account and the minimum balance required to earn the advertised APY is just $0.01. In line with Credit Karma’s other products this one also casts a wide net and is available to anyone over the age of 18 with internet access.
That said, it also caters to higher end individuals and families by extending FDIC insurance up to $5,000,000. The standard amount at any bank or credit union is just $250,000 per depositor or $500,000 for joint accounts. Credit Karma leverages the FDIC insurance limits of MVB Bank, Inc. and its deposit network. We discuss this more below.
Credit Karma High Yield Online Savings Account Rate
|Min. Deposit||Min. Balance||APY|
To put this yield in perspective, the current national average for a savings account sits at just 0.07% APY. Some of the top APYs from online banks hover in the range of 0.50 – 0.60% APY. We should also note that these rates are variable and are subject to change at any time without notice.
As with other online bank accounts and cash management accounts, you’re limited to just 6 withdrawals per monthly statement cycle in accordance with Regulation D by the Federal Reserve.
The primary drawbacks to take into consideration when deciding if Credit Karma’s online savings account is right for you are:
- Limited access to cash. There is no ATM or debit card issued with this account nor does this account come with any check writing capabilities. Your access will be limited to 6 withdrawals per monthly statement cycle which may be used to transfer money to an external bank for easier access.
- Interest compounded monthly. Many online savings accounts feature daily compounding schedules for your balance which leads to higher APYs. In more favorable savings rate environments, the compound frequency has an even greater impact on overall APY.
- FDIC insurance may be lower than expected if you hold funds at a partner bank. The funds you hold at this partner bank would subtract from the $250,000 FDIC coverage they can provide.
How to Open the Credit Karma Savings Account
Opening the account is a painless, three step process that should take all of 5 minutes to complete. If you’re one of the more than 100 million consumers who already have a Credit Karma account then it will be even faster!
Here’s how to get started:
- Navigate to the Credit Karma High Yield Savings page here.
- Click on the big green “Start saving” button.
- At this point, you can login if you’re currently a user of Credit Karma or create an account.
- Creating an account is a three step process. Step one is to confirm an email address, step two is to enter in your personal information (home address, phone number, etc) and step three is to confirm your identity via your social security number
- After these three steps are completed, Credit Karma will call or text you with a security code which you’ll need to enter on your computer screen. This allows you to connect your bank.
- If you bank with one of the major institutions then you should be able to provide your basic online account information and this should sync up these two accounts.
- Now you’re ready to make your initial transfer into your new Credit Karma savings account!
Items to have handy:
- Social Security card if you do not know your number
- State ID or driver’s license
How to Withdraw Funds
Once your account is opened there may come a time when you need access to some of the funds you’ve stashed away. Luckily, transferring funds to your connected bank is both easy and free with the Credit Karma Savings account. Here’s how to do it:
- Login to your account.
- Select withdraw.
- Under ‘withdraw amount’ you can enter the exact amount you wish to transfer.
- Click withdraw.
- Confirm everything you entered is accurate on the confirmation screen and click confirm.
You may not exceed $10,000 in daily transfers or $50,000 in monthly transfers and, as mentioned, you’ll be limited to 6 withdrawals per statement period.
Credit Karma + MVB Bank, Inc and FDIC Insurance
Credit Karma is not an actual bank themselves but they have partnered with MVB Bank, Inc to leverage the banking services of their network.
When you open a high yield savings account with Credit Karma, your funds are deposited into your respective account at MVB Bank and its deposit network of 800 different FDIC-insured, banking institutions.
Once you’ve opened the account, more information can be found about the MVB Bank network in your savings agreement.
By leveraging the FDIC insurance of the banks in MVB Bank, Inc’s network, Credit Karma is able to offer its high yield savings account holders FDIC insurance up to $5,000,000 – or 20x the amount of any standard bank or credit union which currently sits at $250,000 per depositor.
The main caveat to note here, is that each bank can only provide up to $250,000 in FDIC insurance coverage per individual, therefor if you already have funds in one of the network banks Credit Karma/MVB Bank are trying to leverage, your FDIC insurance coverage will be $250,000 minus the amount you hold in that institution.
If you’re looking for a low maintenance, easy to open, online savings account with a competitive APY, then Credit Karma’s high yield online saving account may be a good fit for you.
On top of that if you benefit from FDIC coverage beyond the normal maximum of $250,000 and up to $5,000,000 then this account is even more attractive.
That said, if you value in person banking and easy access to cash along with a respectable APY, then you may be better off going with a regional or nationally available credit union.