Personal Finance Firm Credit Karma to Offer Checking Account in U.S.

Personal-finance company Credit Karma said on Tuesday it would launch a checking account to U.S. members this year, making it the latest fintech to join the crowded digital banking market.

Credit Karma Money Checking will initially be available only to those members who hold a savings account with Credit Karma, the San Francisco-based company said.

Opening a checking account will require no minimum balance or deposit requirements, it added.

The service will be available more widely in early 2021 with offerings being added throughout the year.

Karma, Intuit and Insurance

In February, Intuit, the maker of TurboTax, QuickBooks and Mint, agreed to acquire Credit Karma for approximately $7.1 billion in cash and stock. The combination would bring together two technology leaders focused on personal and small business owner financial challenges that include paying taxes, managing debt, maximizing savings, business accounting, accessing better credit cards and loans – and even recommending car and home insurance, a market Credit Karma entered in 2018.

That $7.1 billion deal is currently under review by the Department of Justice, according to a report by ProPublica. The review is looking at Credit Karma’s free tax prep offering that competes with Intuit’s popular TurboTax product. ProPublica first reported in February that “antitrust experts viewed the deal as concerning because it could allow a dominant firm to eliminate a competitor with an innovative business model.” Intuit already dominates online tax preparation, with a 67% market share last year, according to ProPublica.

Credit Karma, which has 100 million members in the United States, Canada and the UK, is best known for letting customers access their credit scores and some other personal finance tools for free. It also offers third-party credit cards and loans to customers, tailored to their credit history.

Several fintechs have been expanding the types of financial services they offer and moving beyond their initial area of focus. Many are now seeking to attract deposits, often through enticing rates or low fees. (In 2018, Credit Karma entered the insurance business.)

Credit Karma hopes its product will stand out among competitors because of how it connects to the company’s other offerings, Kenneth Lin, Credit Karma chief executive officer and founder, said in an interview.

“The differentiation is going to be the connection to the credit and a holistic view of your financial life,” Lin said. “It helps consumers build credit and pay off the debt and save for their future.”

Credit Karma will be offering its checking account through MVB Bank Inc., a member of Federal Deposit Insurance Corp., a U.S. bank regulator. Lin said the company does not have plans to apply for a banking charter.

“We are not looking to be a bank,” Lin said.

(Reporting by Anna Irrera in London and C Nivedita in Bengaluru; Editing by Maju Samuel)