NerdWallet Business Model: How Does NerdWallet Work and Make Money?

NerdWallet Business Model
Source: www.nerdwallet.com

What is NerdWallet?

NerdWallet is an American personal finance company that started its operations in 2009. The company began with an initial capital investment of $800 by its founders Tim Chen and Jacob Gibson. Initially, it provided a web application that provided comparative information about several credit cards. Later, however, it expanded its operations from generating large quantities of content to boosting its search engine results.

NerdWallet is a financial platform that primarily focuses on the provision of financial advice and content. It covers banking, taxes, insurance, mortgages, student loans, and similar areas. However, its primary source of fame still includes its content and information about credit cards and other financial products. On top of that, the company also provides a wide range of calculators that can help users in various areas.

NerdWallet’s tools are among the best in the market. For example, it includes down payments or interest calculators, which can help users in decision-making. Similarly, the company creates guides on several financial areas that can help users manage their money effectively. Most of these services are free to the users, although users can register on NerdWallet as well.

When users sign up to NerdWallet, they can track information about their account balances and credit scores. The company provides them with customized products and strategic suggestions based on that information. Therefore, users won’t deal with generic ideas or recommendations. Users can access the platform through its website. However, it also has a mobile app on the Android and iOS stores.

NerdWallet has been operational since 2009. Over the years, it has gone through several ups and downs. Similarly, it has also been active in the investments market. Recently, it also went through an Initial Public Offering in November 2021, raising $130.5 million in capital. The company went public on the Nasdaq. In 2017, NerdWallet reported revenues of $100 million.

Overall, NerdWallet is an online financial services company. It provides and develops online solutions that give users information, insights, and consumer-driven financial advice. While it is accessible without any registration, users can also register on the platform for more personalized services. Users can use this platform to understand personal finance involving various areas.

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How does NerdWallet work?

NerdWallet has several features which work differently and independently from each other. Firstly, the platform has content regarding various financial fields. These include credit cards, investing, insurance, student loans, mortgages, personal loans, banking, and even traveling. Users can access this content without registering or signing up to the platform. Apart from these, NerdWallet has several tools, such as calculators.

These tools provide users with the ability to estimate various aspects of their finances. These also focus on several areas. Some of these include credit cards, credit score, and debt solutions, banking, investing and retirement, spending and saving, taxes, travel, etc. These calculators are free for users to use, for example, the content on the platform. With each of these tools, the company provides guides on how users can do it themselves.

The aim of providing these calculators is for users to plan for their financial decisions. However, the company does not make money from these directly. Apart from these tools, NerdWallet also provides credit cards and other financial product reviews. These reviews allow users to compare all available options and get the best out of the one they choose.

As mentioned, NerdWallet also provides specific services to users who register with its platform. For that, users have to sign up to NerdWallet, which is a straightforward process. Once they create an account, users can track crucial financial information, for example, credit scores and account balances. Through this service, NerdWallet also provides personalized recommendations and suggestions to users.

NerdWallet studies users’ information and analyzes it using its algorithms. By doing so, it understands the user’s finances and makes suggestions based on them. Similarly, it devises a strategy for those users based on their data. This way, the company can provide customized or personalized recommendations that suit the needs of its users. Similarly, users can uncover opportunities to save and grow their money. This feature also comes without a charge to users.

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Overall, users can access NerdWallet through its website. Therefore, they can use the company’s services through a browser. Apart from that, they can also get the NerdWallet app on both Android and iOS. NerdWallet also has a podcast that provides similar services as its website. Users can listen to this podcast through various platforms.

What is the NerdWallet business model?

NerdWallet uses a commission-based business model. However, these commissions do not come from its users. As mentioned, the company provides various services that allow users to manage their finances better. However, none of these services come at a charge for the users and are free to use. Most users wonder how NerdWallet makes money despite these services not costing anything.

However, the commission-based business model allows NerdWallet to make money from affiliate marketing. The company has affiliations and partnerships with various financial services. When the company suggests users use a partner’s services, it registers as affiliate marketing. Every time a user signs up for the recommended services, NerdWallet makes money from the service provider.

NerdWallet charges a different commission from each partner. In some cases, the company may not get any returns from recommending services. Other times, NerdWallet can make hundreds for each deal. Usually, the company only converts 5% of its users into buying customers for its partners. The company gets compensation based on a percentage for products, for example, loans.

Although NerdWallet primarily makes money from affiliates, it does not change its suggestions to earn more. The company discloses any affiliate commissions on its site. Similarly, the company focuses more on customers’ needs rather than earning commissions. It has also been one of the critical success factors for the company.

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How does NerdWallet make money?

As mentioned, NerdWallet uses a commission-based business model. However, it also indulges in affiliate marketing. Therefore, the company makes money through affiliate commissions on every customer that signs up for a recommended product. In essence, NerdWallet generates a commission every time a user purchases a recommended partner’s products.

The company also discloses these commissions on its websites. NerdWallet mentions that its tools and content are free to use. However, these tools intend to help and not to provide investment advice. The company further discloses that its partners compensate it for its services. Furthermore, NerdWallet is open in admitting that these commissions influence which products they review and cover.

However, these partners do not impact the advice the company provides to its users. Therefore, its financial advice is free from any influence. NerdWallet makes money from credit cards, loans, and other product recommendations. Overall, all these recommendations provide similar revenues to the company. These commissions come from revenue per action, revenue per lead, revenue per funded loan, and revenue per click basis.

Overall, NerdWallet makes money by recommending the products offered by its partners. These recommendations suit the user’s needs. Therefore, users are more likely to purchase the suggested options. This way, NerdWallet makes a fixed or percentage-based fee from those partners. These fees may differ based on the agreement the company has with its partners.

Conclusion

NerdWallet is a personal finance company that provides content and tools for users to manage their finances. The company has a website through which it offers its products. Since 2009, NerdWallet has operated in the same industry. However, most of its services are free of charge, making users wonder how it makes money. NerdWallet primarily generates revenues through affiliate commissions, as mentioned above.

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