Credit Karma Money Save (Credit Karma Savings) Review
As someone who’s written about FinTech for a couple of years now, I’ve definitely spotted a few trends along the way. One of the biggest I’ve seen is the expansions many startups have made by adding basic banking services to their other offerings. Case in point: Credit Karma Savings — which was brought into the world in the fall of 2019. That service has now been rebranded as Credit Karma Money Save along with the addition of Credit Karma Money Spend.
So how does this banking extension of the Credit Karma brand stack up against other options? Let’s take a look at what the free savings product has to offer.
What is Credit Karma Money Save and How Does it Work?
Opening a Credit Karma Money Save account
First of all, in order to open a Credit Karma Money Save account, you’ll first need to sign-up for Credit Karma. If you’re not familiar, Credit Karma is a completely free tool that will give you access to your education credit scores from TransUnion and Equifax. Luckily, the process of setting up that account is fairly simple — but you can read more about that in my full review.
Anyway, once you have your main Credit Karma account set up, you’ll just need to complete a couple of additional steps to open a Money Save account. This includes confirming your address and Social Security number. In some cases, they might also ask you to verify the email address and phone number associated with your account. Finally, you’ll need to agree to the account disclosures and terms. After that, your account should be ready to go and you can initiate your first transfer.
Just like Credit Karma itself, Credit Karma Money Save is completely free to use, with no minimum balance fees or other expenses. Equally as important, all funds deposited to Credit Karma Money Save are FDIC insured thanks to a partnership with MVB Bank. Therefore, there’s very little risk in opening an account.
Since Credit Karma Money Save doesn’t operate any branches nor do they own any ATMs, the only way to transfer money into your account is by linking an external bank account. Like dozens of other tools I’ve talked about before, this is accomplished using the service Plaid. With Plaid, you can simply log into your existing bank account and allow for easy transfers to your Credit Karma Money Save account.
While Plaid makes the process of linking an account easy, one quirk is that Credit Karma Money Save currently only allows you to connect one external account at a time. Therefore, if you want to transfer funds from a different account, you’ll need to override the other. Then, when you want to go back to the other account, you’ll repeat the process. Hopefully this is something Credit Karma can fix in the future as it’s slightly annoying for people like me who like moving money between multiple accounts.
Speaking of transfers, Credit Karma Money Save makes it easy to set-up recurring deposits. Not only can you select how much you want to automatically transfer at a time but can also decide how often you want these deposits to occur (weekly, every other week, or monthly). You can also choose the start date, which is especially useful if you want to line up savings transfers to your pay date.
As I mentioned earlier, unfortunately, Credit Karma Money Save only allows you to link one account at a time. I bring this up again because, if you do end up switching to another account — even temporarily — it means disabling any transfer routines you have established. The good news is that re-establishing your automation is just as simple as it was the first time, but this could get annoying if you frequently need to switch accounts.
On top of offering a convenient place to automatically stash your cash, Credit Karma sweetens the pot by offering an interest rate much higher than what traditional banks tend to offer. That said, with the Federal Reserve slashing interest rates over the past year, Credit Karma Money Save’s current APY pales in comparison to its former self. Nevertheless, the 0.30% APY (accurate as of January 13, 2021) does still top some other top FinTech accounts — including my go-to, SoFi Money.
Note that interest payments are made on the last day of a given month. Also, if your interest due for that month amounts to less than $0.01, you won’t receive any interest for that period. And finally, you must maintain a minimum daily balance of at least a penny in order to earn your APY.
Managing your account
Since Credit Karma Money Save is just one feature of the much larger Credit Karma ecosystem, the account doesn’t currently have its own app. Instead, when logging into the Credit Karma app, you’ll see your savings balance displayed right above your credit scores. You can then access your account details — including viewing recent transactions, managing automated deposits, etc. — by tapping that widget or tapping the “Money” icon in the top toolbar. This is also true for the Credit Karma desktop site, although here you’ll either tap the balance box that shows on your dashboard or click the Savings tab.
Using with Credit Karma Money Save
The change from Credit Karma Savings to Credit Karma Money Save comes as the platform is also in the process of rolling out a checking counterpart named Credit Karma Money Spend. As I noted in my full review of that product, Spend offers users a free debit card that comes with the chance to unlock “Instant Karma” — meaning that random purchases made with the card (over $1) may be comped up to $5,000. However, it’s unclear what the odds of such an event happening are. Meanwhile, the Spend account also enables customers to access more than 55,000 fee-free ATMs that are part of the Allpoint network.
To me, perhaps the biggest benefit of using the Credit Karma Money Spend account in tandem with the Save account is that you can transfer funds between the two instantly — and without overriding your default external account link. This could definitely be helpful in terms of speeding up access time to your stored funds. Other than that, the Spend account is pretty basic and lacks some features one might hope for from what is still called a “checking” account.
To further incentivize customers to save, Credit Karma has been running a series of sweepstakes tied to their Savings accounts. Currently (for January 2021), the sweepstakes features a $20,000 grand prize. In order to qualify, all you’ll need to do is deposit at least $1 into your Credit Karma Money Save account during the sweepstakes period. This offer is also open to new users who open an account and fund it with at least a buck. Obviously your odds of winning this prize are very, very small — but, hey, it’d be pretty awesome if you did, right?
Okay, so the heading for this section is kind of a lie because… there really aren’t any other features for Credit Karma Money Save. It’s simply a place to store your savings and earn a bit of interest for doing it. So, if you’re looking for a full-featured banking option, you’ll probably want to look elsewhere.
Final Thoughts on Credit Karma Savings
Credit Karma Money Save is about as basic of a banking account as you can get. But, to be fair, that’s likely by design. After all, the service isn’t a bank but a general personal finance tool. Therefore, it’s hard to be too upset about a feature that is merely a value-add to a larger ecosystem.
At the same time, I do wish Credit Karma Money Save could make some functionality changes. Most notably, I don’t understand why you are limited to linking just a single external account at a time. Beyond that, I’d also like to see them get a bit more creative with their transfer automation options — perhaps even taking a page or two from the app Astra.
That said another minor plus in Credit Karma’s column is their APY, which remains somewhat competitive in the face of historically low interest rates. Between this and the fact that the account is free of fees, there aren’t a ton of reasons not to open an account. Therefore, whether you’re already a Credit Karma user or are just looking for a painless way to set money aside (and earn some interest while doing it), it may be worth opening a Credit Karma Money Save account for yourself.
Frequently Asked Questions
Yes. Credit Karma Money Save is a product offered by Credit Karma — a well-respected FinTech company currently being acquired by Intuit.
Yes. Funds deposited into your Credit Karma Money Save account are FDIC insured and connections to external accounts are made via the secure API Plaid.
As of January 2021, Credit Karma Money Save offers 0.30% APY. However, this is subject to change.
Funds from your Credit Karma Money Save account can be transferred to an external bank account at any time or to your Credit Karma Money Spend account. Transfers to external accounts may take 2-3 business days although transfers to Spend are instant.
Also published on Medium.