Acorns is not a savings account—it's an investment app that rounds up your purchases
Acorns works differently from a savings account. When you link your debit card or credit card to Acorns, the app rounds up each purchase to the nearest dollar and invests the difference. If you buy coffee for $3.50, Acorns invests $0.50. That money goes into a portfolio of stocks and bonds, not into a savings account where it sits untouched.
You can use Acorns alongside a savings account, but it should not replace one. A savings account holds money you might need quickly—for emergencies, upcoming bills, or short-term goals. Acorns is designed for money you are comfortable leaving invested for months or years, because the value can go up or down depending on how the stock market performs.
Key Takeaways
- Acorns invests your money in stocks and bonds, so the amount you have can decrease as well as increase, unlike a savings account where your balance stays the same.
- You cannot withdraw money from Acorns when ready the way you can from a savings account—selling your investments takes a few business days.
- Acorns charges a monthly subscription fee (usually $1 to $5 depending on the plan), whereas most savings accounts have no monthly cost.
- A savings account is better for money you need within the next year or for true emergencies; Acorns works better for money you can leave untouched for several years.
How Acorns differs from a savings account
A savings account is FDIC insured, which means the federal government guarantees your money up to $250,000 per account. If the bank fails, you get your money back. Acorns investments are not insured this way. If the stock market drops, the value of your Acorns portfolio drops with it.
Savings accounts also earn interest—a small percentage the bank pays you for letting them hold your money. That interest rate is fixed and may provide. Acorns does not pay interest. Instead, you earn money only if the stocks and bonds in your portfolio increase in value, which is not may provide.
Speed matters too. You can withdraw money from a savings account the same day, often within minutes. Acorns requires you to sell your investments first, which takes two to three business days to settle, then another day or two for the money to reach your bank account.
When Acorns makes sense as part of your financial plan
Acorns works well if you have a separate savings account already and want to invest small amounts without thinking about it. The automatic round-up feature means you are investing without having to remember to set money aside. Over time, small amounts add up.
Acorns is also useful if you want to start investing but do not have much money to begin with. You do not need a large lump sum—you just need to make purchases and let the app do the work. Many people find this less intimidating than opening a brokerage account and choosing investments on their own.
However, Acorns is not a substitute for an emergency fund. You should have three to six months of living expenses in a regular savings account before you start using Acorns. That money needs to be accessible and safe, not invested in the stock market.
The cost of using Acorns versus a savings account
Acorns charges a monthly subscription. The basic plan costs $1 per month, the standard plan costs $3 per month, and the premium plan costs $5 per month. A savings account typically costs nothing—no monthly fee, no hidden charges.
Over a year, Acorns costs between $12 and $60 just to use the service. That money comes out of your account each month. A savings account costs zero. If you are only investing small amounts through round-ups, the monthly fee can eat into your gains, especially in the first year.
Some banks offer savings accounts with higher interest rates if you meet certain conditions, like keeping a minimum balance or setting up direct deposit. These accounts still cost nothing and may earn you more than Acorns would, depending on how much you invest and how the market performs.
What happens to your money if you need it in an emergency
If you keep your emergency fund in Acorns and the stock market drops 20 percent, your emergency fund drops 20 percent too. You would have less money available when you need it most. This is why financial advisors recommend keeping emergency money separate from investments.
Selling your Acorns investments also takes time. You cannot walk into a branch or call and get your money the same day. You have to request a withdrawal through the app, wait for the sale to settle, and then wait for the bank transfer. In a true emergency, this delay can be a problem.
If you use Acorns as your only savings vehicle and face an unexpected expense, you might be forced to sell investments at a bad time—like during a market downturn—just to cover the cost. A savings account avoids this risk entirely.
Setting up both Acorns and a savings account
The right approach for most people is to have both. Open a savings account at a bank or credit union and keep your emergency fund there. Once that account has three to six months of expenses, you can start using Acorns to invest extra money from your daily purchases.
Link your debit card to Acorns and let the round-ups happen automatically. Check in on your Acorns account a few times a year, but do not panic if the balance goes down temporarily—that is normal when you are invested in the stock market. Leave the money there for at least three to five years so you have time to recover from any short-term drops.
Keep your savings account separate and untouched unless you face a real emergency. This way, you have safety and stability in your savings account, and growth potential in Acorns.
Frequently Asked Questions
Can I withdraw money from Acorns anytime I want?
Yes, but it takes time. You request a withdrawal through the app, and the money takes two to three business days to sell and another one to two days to transfer to your bank account. A savings account is faster if you need money quickly.
Will Acorns protect my money if the company goes out of business?
Acorns holds your investments with a custodian, usually a larger financial company. Your investments are protected, but not the way FDIC insurance protects a savings account. If you are concerned about safety, a savings account is the more find choice.
What if the stock market crashes and my Acorns balance drops?
Your balance will decrease, and you will have less money than you invested. This is why Acorns should not hold money you need soon. A savings account balance never drops due to market changes—it only grows with interest.
Is Acorns better than a high-yield savings account?
Not necessarily. A high-yield savings account earns more interest than a regular savings account and costs nothing. Acorns costs money and has no may provide returns. For emergency funds and short-term savings, a high-yield savings account is usually the better choice.
Can I use Acorns if I do not have a savings account?
Technically yes, but it is not recommended. You should have an emergency fund in a savings account first. Once that is in place, Acorns can help you invest additional money you do not need for emergencies.