I'm thoroughly confused by what Acorn does. I can see that you have to pay them $1/mo, and of course they get access to every single credit card transaction you do.
In exchange for this, they claim to provide some kind of "spare change investment". I feel like I must have misunderstood, because it sounds so silly, but apparently it works like so:
- You decide to buy product X with your card which costs $2.75.
- The transaction reaches Acorn, they take the nearest whole number ($3), and then take the difference ($0.25) out of your card and into your "Acorn account".
- The acorn account is acts like a simplified mutual fund that invests your money.
Is this right, or is it something else, such as Acorn matching the .25 with their own money or something like that? If my description above is accurate, this seems absolutely pointless. I could just not use Acorn, and my CC statement would be $0.25 less, then I could take that $0.25 and transfer it into my investment account myself (together with other "spare changes").
I suppose the one interesting thing you get is being able to invest against your credit card, which in most other cases is not allowed. But since interest on credit cards is so high, if you want to invest borrowed money you'd be better off with almost any other loan anyway.
Is there any real benefit to using Acorn, besides soft benefits like "it helps people get over their anxiety about investing" and "it encourages fiscal discipline/good spending habit"?