Acorns is not a savings account—it's an investment app that rounds up your purchases and invests the money
Acorns works differently from a traditional savings account. When you link a debit 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 diversified portfolio of stocks and bonds, not into a savings account where it sits untouched.
A savings account holds your money in cash, earns a fixed interest rate (currently 4% to 5% at many banks), and lets you withdraw it anytime without penalty. Acorns invests your money in the stock market, which means the value goes up and down. You can withdraw money, but selling investments to do so may trigger taxes on gains.
If you need money to stay safe and available—for an emergency fund, a down payment you're saving for in the next year or two, or money you know you'll need soon—a savings account is the right tool. If you're comfortable with market risk and investing money you won't touch for years, Acorns can work alongside a savings account as part of a longer-term plan.
Key Takeaways
- Acorns invests your money in stocks and bonds through automatic round-ups, not in a savings account where cash stays safe.
- Your money in Acorns can lose value if the stock market drops, unlike a savings account where the balance never shrinks.
- Acorns charges a monthly subscription fee ($3 to $5 depending on the plan), while most savings accounts have no monthly cost.
- If you need an emergency fund or money within one to two years, open a high-yield savings account instead of or in addition to Acorns.
How Acorns invests your money versus how a savings account holds it
When money sits in a savings account at a bank or credit union, it stays in cash. The bank pays you interest on that cash—usually a percentage of your balance each month. Your $1,000 stays $1,000 (plus interest), even if the stock market crashes. You can withdraw it the same day you need it.
Acorns takes your round-ups and buys pieces of index funds—collections of many stocks and bonds bundled together. If the market rises, your investment grows. If the market falls, your investment shrinks. You own a real piece of those funds, and selling them to get your money back can take a few business days. If you sell when the market is down, you get less money back than you put in.
Acorns offers five preset portfolios ranging from conservative (mostly bonds) to aggressive (mostly stocks). Even the most conservative option still moves with the market. A savings account never does.
Fees and costs: Acorns versus a savings account
Acorns charges a monthly subscription: $3 for the basic plan, $5 for the premium plan with checking and savings features, or $10 for the premium plan with a debit card. You pay this fee whether your investments gain or lose money. Over a year, that's $36 to $120 just to use the app.
Most high-yield savings accounts charge nothing per month. You earn interest on your balance instead of paying a fee. If you have $1,000 in a savings account earning 4.5% annually, you make about $45 a year. With Acorns at $3 per month, you lose $36 a year to fees before your investments earn anything.
Acorns also charges transaction fees if you make certain moves, and you may owe taxes on investment gains when you sell. A savings account has no transaction fees and no tax on the interest you earn (though you do report it on your tax return).
When Acorns makes sense and when a savings account is the better choice
Acorns works best if you have money you won't need for at least five to ten years and you're comfortable watching it fluctuate. The longer your money stays invested, the more time it has to recover from market downturns and potentially grow. If you're 25 and investing money you won't touch until retirement, Acorns can be a low-friction way to build wealth.
A savings account is the right choice for money you might need within one to two years: an emergency fund (three to six months of expenses), a vacation fund, a car down payment, or money for a wedding. It's also the right choice if you lose sleep watching your balance go down. Savings accounts are for money you need to stay safe and available.
Many people use both. They keep three to six months of expenses in a high-yield savings account for emergencies, and they use Acorns or another investment app for money they're saving for retirement or a goal years away. The two tools serve different purposes.
How to withdraw money from Acorns if you need it
Withdrawing from Acorns takes longer than withdrawing from a savings account. You request a withdrawal through the app, Acorns sells your investments (which can take one to two business days), and then the money transfers to your bank account (another one to two business days). Total time is usually three to five business days, sometimes longer if markets are closed.
When you sell your investments to withdraw, you may owe taxes on any gains. If you invested $500 and it grew to $600, you owe tax on the $100 gain (at your income tax rate). A savings account has no tax on withdrawals—only on the interest you earned, which you report once a year.
If you need money in a true emergency, a savings account is faster and simpler. Money transfers between savings accounts can happen the same day or next business day, and you never owe tax on a withdrawal.
Acorns features that look like a savings account but aren't
Acorns' premium plan includes an "Acorns Checking" and "Acorns Savings" feature. These sound like a traditional checking and savings account, but they're not. The "savings" feature still invests your money in the market—it's just a separate portfolio from your main Acorns account. The "checking" feature is a debit card linked to your Acorns account.
These features don't give you FDIC insurance (the federal may provide that protects up to $250,000 in a traditional bank account if the bank fails). Your money in Acorns is held by a partner bank, but it's invested in securities, not held as cash. If Acorns or its partner fails, your money is at risk in a way it wouldn't be in a bank savings account.
If you want a true savings account with FDIC protection and no market risk, open one at a bank or credit union. Acorns can be a supplement to that account, not a replacement.
Alternatives if you want both automatic saving and safety
If you like the idea of automatic saving but want your money to stay safe, consider a high-yield savings account with automatic transfers. Set up a recurring transfer from your checking account to your savings account each payday—$50, $100, or whatever you can spare. The money earns 4% to 5% interest and stays completely safe. No fees, no market risk, no taxes on withdrawals.
Another option is a certificate of deposit (CD) at a bank. You deposit money for a set time (three months, one year, five years), and the bank pays you a fixed interest rate higher than a savings account. You can't touch the money without a penalty, which makes it good for goals you know are years away. CDs are FDIC insured and have no monthly fees.
If you want to invest small amounts automatically and you're comfortable with market risk, Acorns is one option. But it's not a savings account, and it shouldn't be your only place to keep money you might need soon.
Frequently Asked Questions
Is my money in Acorns safe if the company goes out of business?
Acorns holds your money with a partner bank and invests it in real securities, so it's not covered by FDIC insurance the way a bank savings account is. If Acorns fails, your investments are still yours, but the process to recover them could be complicated. A traditional savings account at a bank or credit union is insured up to $250,000 per account.
Can I use Acorns as my emergency fund?
No. An emergency fund needs to be in cash where you can access it within hours or a day, and the balance can't go down. Acorns takes three to five business days to withdraw, and your balance shrinks if the market drops. Keep your emergency fund in a high-yield savings account instead.
Does Acorns report interest to the IRS like a savings account does?
Acorns doesn't report interest—it reports investment gains. If your investments grow, you owe tax on those gains when you sell. A savings account reports interest earned, which you also owe tax on. Both are taxable, but they're taxed differently and reported on different tax forms.
What's the minimum balance to open Acorns?
Acorns has no minimum balance to open an account. You can start with your first round-up, which might be just a few cents. However, you do pay the monthly subscription fee ($3 to $10) from day one, so small balances lose money to fees.
Can I move money from Acorns to a savings account?
Yes. Withdraw your money from Acorns through the app, and it transfers to your bank account in three to five business days. You may owe tax on any investment gains when you sell. Once the money reaches your bank account, you can move it to a savings account at the same bank or a different one.