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Written by Cari Scribner on June 17, 2021
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How Does Acorns Make Money?

Acorns is a popular robo-advising, micro-investing platform that lets you put your spare change to good use by investing those loose coins you have sitting around doing nothing.

But to be clear, every online investing app, even micro-investing platforms such as Acorns, is in the business of making money. Sure, they have a mission of helping grow your wealth, but in addition, they have goals to increase their net value as well.

The financial pros behind Acorns set up several ways to make sure the platform thrives financially and keeps pace with its competitors.

Subscription Fees

Acorns makes a profit from subscriptions for lite, personal and family tiers.

You can sign up for Acorns in three levels of membership:

Lite: $1 a month. Includes a taxable investment account.

This level lets you:

  • Invest spare change
  • Earn bonus investments from more than 350 found money partners
  • Grow your knowledge through hundreds of articles from finance pros

Personal: $3 a month. This level tacks on an Individual Retirement Account and a checking account.

This level gives you:

  • All-in-one investment, retirement, and checking account
  • Certain tax advantages
  • Bonus investments of up to 10%
  • Ability to save money with no account fees
  • 55,000+ fee-free ATMs across the nation and around the world
  • Advice on how to save money and more
  • A new, unique metal debit card

Family: $5 a month. This includes everything in the lower tiers, plus Acorns Early, which lets you open investment accounts for kids.

  • Investment accounts for kids with no extra charge when you add children to the plan
  • Potential tax savings as they grow
  • Personal investment, retirement, and checking accounts
  • Automatic recurring investments
  • Family financial advice tailored to your needs

acorns pricing

Referral Fees From Acorns Earn Partners

Acorns Earn is a long list of retail collaborators called Found Money Partners. When you shop at these partner places, you make money when they shuttle an extra 5 to 10 percent of your transaction in cash back to your Acorns brokerage account.

But this program is also a money maker for the app. Acorns earns a referral fee whenever you buy something at any of their more than 350 Found Money partners in the Acorns Earn category.

These retail partners include (but are not limited to):

  • Home Depot
  • Nike
  • Old Navy
  • Wal-Mart
  • Kohl’s
  • Airbnb
  • Macy’s
  • Barnes & Noble
  • Groupon
  • Warby Parker
  • Expedia
  • Sephora
  • Walgreen’s

Management Fees

While they do not earn any commission on your trading activity, Acorns charges an annual management fee of 0.25 percent, although this only applies to accounts larger than $5,000. However, it’s likely the majority of Acorns accounts will be at this level or higher. This fee is applied to the time and effort financial planners take to research the best investing choices out there for you. Remember, you do not put together your portfolio on Acorns, they are pre-built to align with your longer term goals.

For any member that has less than $5,000 in their account, the management fee is waived.

Interest On Cash

Just like other traditional banks, Acorns uses the cash sitting in your user account to lend it out to other financial institutions.

Then, Acorns makes money by collecting interest from these places. In the year 2020, this net interest margin was 2.81%.

Conclusion

Acorns has three subscription tiers that come with membership fees that grow the platform’s net worth.

Its found money program encourages people to shop at their vetted list of retailers and service-providers because a percentage will be shuttled back into your investing account. However, this long list of partners will also pay Acorns a percentage for sending customers its way.

Management fees are tacked on to accounts with a value greater than $5,000, which likely includes most accounts.

Finally, Acorns makes money by lending out idle cash to other financial institutions, earning a net interest margin hovering around 2.8%.

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Article written by Cari Scribner
Cari Scribner is a career journalist with 20 year’s experience writing for newspapers and magazines. Now a freelance writer, she is also a published fiction writer with more than 15 short stories in literary mags. She recently completed a novel that is on the desk for consideration at two publishing houses. She lives with her two small dogs, Miloh and Lucy, in Upstate NY.

Platform Reviews

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Robinhood
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