Credit Karma is the latest fintech company to jump on the mobile banking bandwagon. The company is now offering a free high-yield savings account, which is somewhat of a departure from the product itâs most famous for: providing consumers with access to free credit checks.
Credit Karma joins a slew of firmsâincluding SoFi and Bettermentâthat have recently rolled out cash management accounts of their own. Credit Karma Savings will offer a generous 1.90% APY, and the company says it will leverage technology to keep its rates competitive. Credit Karma is partnering with a network of banks to hold your deposits and gain Federal Deposit Insurance Corporation (FDIC) insurance.
Expected to launch later this year, Credit Karma Savings is a high-yield savings account that will be accessible through the companyâs app. Credit Karma claims it will take consumers just âfour clicksâ to get started.
Once signed up, deposits will collect an APY of 1.90%. Thatâs 22 times more than the current national average of 0.09% for savings accounts. Credit Karma says it will leverage technology to keep that rate moving competitively, so that consumers wonât have to monitor rates themselves to ensure theyâre getting the most for their money.
There are no fees or minimums required to open a Credit Karma Savings account, and deposits up to $5 million are insured by the Federal Deposit Insurance Corporation (FDIC). To achieve this, Credit Karma partnered with MVB Bank to provide banking services, and it will be utilizing a network of over 800 banks to hold deposits.
However, itâs important to note that the amount that is actually insured is dependent on whether you already have a balance in a partner bank and how much that balance is: âActual insured amounts may be lower or adversely affected based on any balances you hold at a network bank,â Credit Karma said.
Credit Karma joins the ranks of other fintech companies that have recently launched high-yield savings accounts or cash management accounts for consumers, all boasting no fees and no minimum balance requirements. Hereâs how Credit Karma Savings stacks up against companies with similar products.
Credit Karma Savingsâ 1.90% APY is certainly nothing to sneeze at, especially when looking at other fintech companies that offer similar high-yield accounts for stashing your cash. But other savings accountsâparticularly those at online banksâboast even higher rates. Vio Bank, for example, currently has an online high-yield savings account with an impressive APY of 2.07% , while HSBC Direct Savings touts a 2.05% APY.
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