You need a high yield savings account. Check out my Credit Karma Savings Account Review to see if Credit Karma Savings is the right one for you.
69% of Americans have less than $1,000 saved, which is a scary thought. What happens if an emergency occurs, like your car needs new tires, your fridge goes out, or you get injured? You may be forced to charge it on a credit card, which can end up costing you thousands in interest.
Simply put, you need an emergency fund.
So where should you open your bank account to start saving? Rates at the leading national banks like Chase Bank, Bank of America, and Wells Fargo are near zero percent. On top of that, these national banks have account maintenance fees that can be $100’s per year. Yes. Account maintenance fees. These can be avoided, but still, you don’t want to be caught in this ticky tacky nonsense.
Further, every year, inflation eats away bit by bit at your savings, so by leaving your money in these accounts, you are actually losing money even if you don’t pay any fees.
So what bank account should you open if you want a free, high yielding, easy to use savings account? Today, I am taking about Credit Karma Savings.
Now, there are a lot of savings accounts out there. Everyone seems to be opening new bank accounts, from Wealthfront to T Mobile Money.
With that being said, I think Credit Karma Savings is overall a pretty solid high yield savings account.
First off, Credit Karma Savings has a 1.90% interest rate. This is a great rate and is among the highest of its competitors. The Federal Reserve has cut interest rates three times in the last several months, which has put pressure on all FDIC-insured savings account rates. In fact, Credit Karma Savings used to have a higher interest rate just a short while ago.
What I look for is how the banks are providing that interest rate. And here is what I found for Credit Karma Savings.
Credit Karma is tracking yields at more than 800 financial institutions, a network it is working with to allow it to "optimize" its rate on a monthly basis. As banks change the interest rates they offer, Credit Karma will move customers' deposits to those paying the best yields-though each customer will still access their money through a single account with the company.
Credit Karma also keeps no interest for themselves, either, and therefore are passing long most of it to customers.
Because of the way Credit Karma is calculating its savings, I believe that a top-tier rate is sustainable.
This 1.90% is great especially when compared to 0.01% that most brick and mortar banks offer. If you have $6,000 in savings, that means an extra $106 a year. That is basically free Chipotle every month!
Credit Karma Savings is FDIC insured in the same way that most new fintech high yield accounts are FDIC-insured. Credit Karma is merely the platform, and your funds are actually held with an FDIC insured member bank. Credit Karma is partnering with West Virginia-based MVB Bank, Inc., a real, FDIC-insured bank.
On its website, Credit Karma Savings states that you can learn more about the way it provides FDIC insurance by directing you towards the general FDIC website. This won’t tell you what you need to know. Namely, your accounts get FDIC protection through the sweep program. So technically, your funds only get the $5,000,000 protection once they reach the member banks. Practically, your accounts should be just fine.
Credit Karma Savings account has no fees of any kind. With that being said, there are some drawbacks to this account:
(1) there is no debit card with this account.
(2) There are no physical branches with this account, so if you want to deposit money you must transfer from another bank
(3) You can only make 6 transfers maximum per month with this account since it is a savings account
This account is super easy to sign up for, especially if you already have a credit karma account to check your credit score (which I highly recommend). You do not need to be a member of Credit Karma to sign up.
Overall, I think this account will be a big hit, since Credit Karma has over 100 million members and you get prompted to open the account when you login to your Credit Karma dashboard.
For me personally, I prefer to have simplicity in my life. I bank primarily with SoFi Money, since it is a checking and savings hybrid account with no fees and a high interest rate. I want to be able to withdraw cash and have one go to account.
💰 $25 signup bonus link for SoFi Money: bit.ly/390TLFp (this is my wife Sam’s link, mine’s not working right now)
AFFILIATE DISCLOSURE: Some of the links on this webpage are affiliate links, meaning, at no additional cost to you, I may earn a commission if you click through and sign up. However, this does not impact my opinions and comparisons.