Update 3/6/20: Rate has been decreased to 1.3% APY
Update 11/3/19: Rate has been reduced to 1.9% APY from 2.03%.
Account is now live and Credit Karma is actively promoting it. Reposting as people keep e-mailing us about it.
Offer at a glance
- Interest Rate: 1.9% APY
- Availability: Nationwide
- Hard/soft pull: Unknown
- ChexSystems: Unknown
- Credit card funding:
- Monthly fees: None
- Insured: FDIC
The Offer
- Credit Karma has launched a high yield savings account offering 1.9% APY
Avoiding Fees
This account has no monthly fees
Our Verdict
According to the press release this uses a network of more than 800 banks. This is managed through their banking partner MVB Bank, Inc., Member FDIC. From my understanding Credit Karma moves funds in between these banks based on who has the best current rate and funds are insured by FDIC, based on discussions I’ve had with another financial institution that offers this type of accounts when funds are transferred between the network banks these funds also qualify for FDIC pass through insurance.
Credit Karma is claiming they aren’t taking any of the APY for themselves and the the full rate is being passed onto customers. That being said their are currently a lot of better high yield accounts currently available. I think this type of account will be a new trend and we will be seeing a lot of competition in this space. The idea behind a set and forget account like this is fantastic and I’d love to not have to rate transfer, but Credit Karma’s rate is currently 0.4% APY lower than the best rate and that gap is far too large currently.
Hat tip to reader Pete
View Comments (38)
The rate is now 5.1%
Credit Karma has 5.1% APY as of 2024/03/04
3.30% as of 11/21/2022
APY rate is up to 2.73%
"We're reaching out with not the best news. On March 6, 2020, the interest rate on your Credit Karma Savings account* will adjust from 1.80% to 1.30% APY"
Yikes.
I typically don’t trust these ‘sweep’ FDIC insurance programs as much as just dealing directly with an FDIC insured bank. If Credit Karma folds for example, consider the potential difficulty in filing an FDIC claim to get your funds with them being swept across multiple banks…
Now down to 1.75% APY
There is a significant problem with Credit Karma’s savings account - you cannot add co-owners OR beneficiaries! This is a key requirement for ALL BANKS! If my wife doesn’t have my login info handy and I go into a coma, how does she get the money? Or if we both die how do my heirs get the money? I’ve deposited a substantial sum for the interest benefit but only discovered this flaw AFTER the account setup and deposit. The deposit has cleared, but even after several days the available balance is still $0.00 now that I want to withdraw it back and close the account. There is no support number or even chat to talk to a live person - all help is done via email and it takes usually until the next business day before responses are sent. When I finally get my deposit back I will be closing this account. Credit Karma has been great for helping me monitor my credit, but because of the flaws in this new savings system I would think twice about using it again.
Warning: According to this support article there is no way to change the external account after linking for the first time. A post on reddit's PF sub has one user's struggles trying to get it changed after closing the linked account, effectively trapping their money in CK savings.
https://support.creditkarma.com/s/article/How-do-I-change-the-external-funding-account-linked-to-my-Credit-Karma-Savings-account
https://www.reddit.com/r/personalfinance/comments/drzyv5/credit_karma_savings_issues_advice_needed_beware/?utm_medium=android_app&utm_source=share
1.90% APY now
And just like that it dropped .13% not long after it debuted.
Yup, today 11/3 it was 1.90%