I've been using it since the middle of 2016 during/after a stretch of six weeks where I didn't get any hours at my job.
It invests the money in the account in a selection of index funds based on the aggressiveness level the user designates - I'm pretty sure it's just Vanguard funds, but maybe there's a few others in there; unlike using something like Robinhood to buy shares of those funds directly, Acorns uses fractional shares, reducing the price paid and smoothing it over the entire portfolio. There is no individual selection of stocks. Basically, it's all automatic and simply tracks the value of the market over time (the very basic definition of what an index fund does). The spare change investing that features prominently in their advertising is there, and it is worth turning on, but it's far less practical to keep the account going. The $1/month maintenance fee* is mostly offset by both the spare change round-ups and the appreciation of the account through rising market value and the dividends paid into/reinvested through the account.
Generally speaking, you'd have to do
tons of regular credit card** transactions to sustain the account on round-ups alone (also, the round ups don't come off
every transaction; Acorns waits until there have been at least $5 worth of round-ups before pulling that spare change from your bank account as a single withdrawal). They have options for one-time deposits and for recurring deposits from a bank account, which are much more reliable for long-term growth than the round ups are. Since all of my credit cards are rewards cards, I've cashed out the rewards a couple times into my checking and then transferred them into Acorns as a one-time deposit.
Acorns is not tax-deferred - they'll send you a 1099 PDF yearly to file/pay taxes from. The newly-launched Acorns Later service is probably deferred (I'm only half-remembering the announcement for it, since I don't particularly care), as it's more explicitly supposed to be a retirement account.
*which had its cap extended recently; it's now $1/month for accounts under $1M, whereas before it was only for accounts under $5K. So basically, for the vast majority of its users, it'll work out to a total of $12 per year to keep the account open with any amount of money in it. There are no fees if there's no money in the account (unless that changed somewhere along the line too, but I hadn't seen anything about it). There also had been a provision that students and those under age 24 had the $1/month fee waived, but again, not sure if that still applies. Regardless, once you have about $300 in the account, the monthly fee is basically invisible. Not to mention that the account's funds are only insured up to $500,000 through SIPC ($250,000 for cash claims), so between that and general diversification strategies you probably shouldn't have more than that in the account anyway.
**because under no circumstances would I
ever recommend using a debit card for pretty much anything, because if it gets compromised,
well.... Credit > cash > debit, in that order, but Acorns only tracks credit and debit transactions, so you know, credit.
