So, it clearly says on the screen "+100 karma" whenever I kill a minor demon and i have also found some altars wich give me karma and I've gotten tons of bonus karma from killing stuff.

But whenever I open my upgrades menu it says "0 Karma"

What the hell is this?

After collecting a certain amount of Karma (don't know how much) you get a skill point which you can then spend in the upgrade menu.