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Business Operations Business Models

How Does Credit Karma Make Money (Business and Revenue Model)

The Credit Karma business model

Credit Karma logo
Here’s what you should know:
  • What is Credit Karma, and how does Credit Karma work?
  • How does Credit Karma make money?
  • Referral Fees (from Partnering Lenders)
  • Interchange Fees (Credit Karma Visa® Debit card)
  • Credit Karma subsidiaries, acquisitions, and exits
  • Credit Karma profit and revenue
  • What is the Credit Karma business and revenue model?
  • Credit Karma funding, net worth, and valuation

How does Credit Karma make money and how is it free to use? Well, here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Credit Karma business and revenue model, how much Credit Karma makes per year, and how Credit Karma works.

What is Credit Karma, and how does Credit Karma work?

Credit Karma is a personal finance company that simplifies monitoring a user’s credit score.

Founded in 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard, Credit Karma went on to later get acquired by Intuit for approximately $7.1 billion, in December 2020.

Since that time, Credit Karma now has over 100 million members that use their free products and services.

So, how does Credit Karma work? To use Credit Karma, users must first either download their mobile app on Apple Store or Google Play store; or visit their website to create an account.

Once signed up, users can do things like monitor their credit score, receive personalized loan recommendations based on which are their “highest chances of approval”, open a Credit Karma checking or savings account, and more – all for free.

Some of Credit Karma’s competitors include LendingTree, NerdWallet, Bankrate, Policygenius, and other loan comparison websites.

Credit Karma App in Apple App Store | Credit Karma Business Model | How Does Credit Karma Make Money? | How Does Credit Karma Work?
Source: Apple App Store | Credit Karma

How does Credit Karma make money?

According to Credit Karma, Credit Karma has more than 100 million members using their app.

So how does Credit Karma make money from all of those users if the services they offer are free?

Below is a breakdown of how much money Credit Karma makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Credit Karma makes money in 2022

Credit Karma has a revenue model that makes money in two (2) ways; referral fees from partnering lenders advertising on their site and interchange fees from their Credit Karma Visa® issued debit cards.

#1. Referral Fees (from Partnering Lenders)

If you have ever used Credit Karma before, you may have noticed their “Advertiser disclosure” at the top of each page. This is how Credit Karma makes most of its money. By earning a fee or “commission” through its network of partnering lenders.

How does Credit Karma make money from referrals? Credit Karma makes money every time a Credit Karma user applies for a recommended financial product or service from Credit Karma’s website.

When this happens, Credit Karma receives compensation for referring a new customer to that lender. Although it’s unclear how much Credit Karma receives per lead and or approval.

Credit Karma fees | Credit Karma Business Model | How Does Credit Karma Make Money? | How Does Credit Karma Work?
Source: Credit Karma

#2. Interchange Fees (Credit Karma Visa® Debit card)

Credit Karma also makes money off of the interchange fees they receive from their visa debit cards that get issued to customers who open a checking or savings account with Credit Karma’s “Credit Karma Money”.

How does Credit Karma make money from interchange fees? Credit Karma earns revenue whenever a cardholder uses their Visa issued credit card.

When this happens, Visa charges the merchant an interchange fee between 1.15% + $0.05 to 2.40% + $0.10 of the charge amount. From that, Visa gives a percentage of its interchange fee revenue to Credit Karma. Although it’s unclear what percentage Credit Karma receives from Visa.

Credit Karma Visa® Debit card | Credit Karma Business Model | How Does Credit Karma Make Money? | How Does Credit Karma Work?
Source: Credit Karma

Credit Karma subsidiaries, acquisitions, and exits

Aside from Credit Karma being acquired by Intuit for $7.1 billion, Credit Karma has had its own fair share of acquisitions as well.

To date, Credit Karma, Inc. has made a total of 8 acquisitions and 1 investment.

Mergers and acquisitions business model
Source: Crunchbase | Credit Karma

Credit Karma profit and revenue

In 2021, Intuit reported Credit Karma was roughly 9% of their total revenue; which works out to approximately $867 million in revenue for Credit Karma in 2021.

Note: Because Intuit Inc., the parent company of Credit Karma, is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Intuit’s publicly released financial reports, including annual reports, through Intuit’s investor section on their website.

What is the Credit Karma business and revenue model?

Credit Karma makes money through a few revenue models that they combine within their company, they are:

  • Freemium business model
  • Commission based business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Credit Karma funding, net worth, and valuation

According to Credit Karma’s Crunchbase profile, Credit Karma has raised $868 million over 8 rounds.

In December 2020, Credit Karma was acquired by Intuit for $7.1 billion.