Dedicated to Deposits: Deals, Data, and Discussion
DETAILSINSTITUTIONAPYMINMAXPRODUCT
TIAA Direct0.80%--High Yield Savings
TIAA Direct0.80%--Money Market
Accounts mentioned in this post. Rates as of August 26, 2014

Update on TIAA Direct and Its Savings Account

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TIAA Direct

When TIAA-CREF launched its new internet bank TIAA Direct last February, the launch didn't go smoothly. Many readers tried to apply for the TIAA Direct 1.25% savings and money market accounts. Some were told that only TIAA-CREF employees were eligible to open accounts. Several readers who applied were rejected. These problems may have been due to the bank not being completely prepared for a popular account. It appears improvements have been made. The bank's FAQ now states that "Our accounts are available to U.S. citizens and permanent residents of the 50 United States and the District of Columbia who are at least 18 years old and have a valid tax identification number." In addition, a few readers who were rejected in February have reported success in opening accounts. Here's one comment from such a reader:

I had the initial account denied experience in early march, got a vague letter, call them up. They could not explain letter or denial. Said to reapply, which worked just fine. Account, set-up, funded it with an ACH transfer. My FICO is 790, and I am definitely a rate chaser (have five accts opened in the last year or so).

I was impressed that they have US Passport as ID coded into their application process. Most online banks have something of fit if you use a US Passport as ID.

However, more improvements are still in the works. An important one is payable-on-death designations. I spoke with a TIAA Direct CSR yesterday, and she said they are still working to allow beneficiary designations. So customers still can't list beneficiaries for their TIAA Direct accounts. I don't know why this is taking so long.

How Long with the 1.25% APY Last?

I also asked the CSR if she had any idea how long the 1.25% APY may last. She claimed not to know. It's subject to change at anytime. It has been 7 weeks since I first reported on the 1.25% APY. How much longer will it last? I looked at the history of three internet banks and how their rates changed after they launched. I excluded internet banks that offered a rate guarantee. I also excluded periods when the Fed was changing the Fed funds rates.

E-LOAN grabbed attention when it launched its internet bank in September 2006. Its 5.50% APY was well above what other online banks were offering. E-LOAN did its first rate cut in December 2006, but the rate stayed competitive at 5.38% APY.

I first reported on Colorado Federal Savings Bank online savings account in November 2009 when it was offering 1.70% APY. This rate was cut to 1.50% APY in February 2010.

The most recent case is UFB Direct, the new internet bank created by Bank of Internet USA. UFB Direct launched in August 2011 with savings account paying 1.30% APY. That continued until January 2012. By the end of February, the rate had fallen to 0.80%.

One thing that is certain is that TIAA Direct will eventually be cutting its rate. I think the best we can hope for is that the 1.25% APY will last well into this year. Hopefully, they will keep it competitive. Its CD rates are a little low for internet banks which leads me to believe the savings account rate may eventually fall below the rates of ING Direct.

For more details about TIAA Direct, please refer to my first TIAA Direct savings account review.


  Tags: TIAA Direct, savings account, money market accounts

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Comments
41 Comments.
Comment #1 by ricsue posted on
ricsue
Had no problem opening the account at TIAA and received checks for the account promptly. I would like to see a POD, CSR told me they do not have this at the present time. Hope they keep the rate for a few months!

2
Comment #2 by Zack Jones (anonymous) posted on
Zack Jones
We also opened an account with no trouble after reading about it here. We are in the process of getting everything moved over from BoA and will be closing that account within the next couple of weeks.

 

2
Comment #3 by pua (anonymous) posted on
pua
As a retired college professor, I have been a TIAA-CREF retirement investor for 45 years, and very satisfied with their service.  So as soon as I saw Ken's article mentioning the TIAA savings and money-market account with rate of 1.25%, I jumped on it.  Online application with ACH transfer worked fine; got the initial packet of free checks right away, and closed out my Capital One savings account to send the money to TIAA for a much higher interest rate.  I'm a rate-chaser, so TIAA will lose most of my money if they lower their rate too far (just like Capital One lost my money when they lowered their rate too far).  But I hope TIAA will keep its rates higher than the competition, or at least equal; because I really like that institution.

10
Comment #4 by Anonymous posted on
Anonymous
So this is what it has come to, we get excited about a 1.25% rate and one that we don't even know how long will last.

Thank you Ben...

20
Comment #5 by Anonymous posted on
Anonymous
I just called Tiaa Direct. The CSR said that there will be a fee for doing ACH ($10 for outgoing and $20 for incoming)? Is it true? It was a surprise.

2
Comment #6 by Rebecca (anonymous) posted on
Rebecca
#5, I have had no trouble with ACHs.  I saw that they charge for wire transfers, so maybe the CSR was confused.  However, I have had the account less than a month, so they could conceivably slap me with ACH fees at the end.

4
Comment #7 by Anonymous posted on
Anonymous
Hi Rebecca,

Can you do both incoming and out going ACHs? Thanks.

1
Comment #9 by Anonymous posted on
Anonymous
No problem opening it.  However, received first statement and it showed APYas1.11 not 1.25%.  I called up and was first told that the 1.11% was an average as I had first opened with $25 and then added money to the account.  I responded that this didn't make any sense and that the 1.25% was for all amounts $25 or higher and that the amount should factor into the amount of the interest and not the APY itself.  I was then told the 1.11% was a mistake and it should have been 1.25%and that the amount of interest I received reflected the correct amount.

I have had bank accounts for years and this is the first time any bank has made such a mistake.  I have had a retirement account with TIAA-Cref for years without problem.  It seems the bank isn't yet ready for prime time.

2
Comment #10 by Anonymous posted on
Anonymous
Thanks for all of your posts. I have decided not to open an account with this online bank. They sound too fishy, too suspicious. I will keep my money with more reputable institutions.

3
Comment #11 by Anonymous posted on
Anonymous
To anonymous #9: 

Their money market APY is 1.25%.  The monthly interest is paid at month-end.  The actual amount you receive is prorated.  One way to understand proration is to say the amount paid is (average balance during the month) x 0.0125 x # days in month / # days in year.

 

5
Comment #12 by Anonymous posted on
Anonymous
The tiaa-cref bank had a little trouble starting up, but that is not surprising.  It seems to be working fine now.  The customer security system seems to be one of the best among banks. The interest rate of 1.25 percent is much better than banks like Chase and Citi, where the rate is 0.5 percent, and over time the difference in yield will be significant.  Of course that rate can change.  One can always go back to some other bank if there is a better rate available.  As for reputation, TIAA-CREF is a company started in 1918 and has grown significantly.  It's ratings from Morningstar and the insurance rating agencies are invariable at the top. And Citi, with its $14,000,000 salary for Mr. Patel for the year 2011, is paying lower interests rates to support that !% of the population's excessive pay.    

3
Comment #13 by Anonymous posted on
Anonymous
I opened an online account with $250,000 five weeks ago due to the interest rate. When I went to write my first check for a purchase at Tiffany's, it was declined. I spent over an hour in the store on the phone with a Bank Representative named Doreen, who said she was sorry, there was nothing she could do. Yes she said, there is sufficient money in your account to cover this, but maybe there is a problem with Tiffany's check scanner! How ridiculous, and how humiliating.....Doreen also stated someone would get back to me the following day with an answer. The following day was a Saturday, and I did not wait to be contacted, but rather called in and spoke with a Supervisor named Kenny. He said there was nothing he could do on the weekend, that the research department would review and get back to me. "This has never happened before." Really? I said close the account and send me the money.....I don't need this stress and worry. This bank is incompetent and untrustworthy. And so I will be unable to access my OWN MONEY UNTIL THE CHECK IS MAILED (7-10 business days) AND THEN CLEARS ANOTHER BANK. And no I will not have them wire the money to another account because I do not trust them to do that correctly either.

5
Comment #14 by lou posted on
lou
You don't trust them to wire the money, but you trust them and the post office to send you the $250,000 by regular mail. Wow!

8
Comment #15 by Anonymous posted on
Anonymous
You wrote a check at Tiffany's?  That's funny....

7
Comment #16 by numberten posted on
numberten
Opened my account on 3-May-2012. No surprizes yet.

 

1
Comment #17 by CaliforniaGirl (anonymous) posted on
CaliforniaGirl
I just spent 30 minutes grinding thru the online application for a joint high interest savings account and then was kicked off with a "We could not complete your request" message. Don't start this process unless u have time to waste. Already hate this bank. Today is May 16, 2012.

2
Comment #18 by Aura (anonymous) posted on
Aura
My application was denied several times. For no reason and no explanation.

1
Comment #19 by John Q. (anonymous) posted on
John Q.
Set up my account online in 5 minutes. Easy. I've already transferred funds to the account from my regular checking account with no problems. I also use ING and TIAA's funds get credited faster than with ING. Not sure why that is but that's a nod in their favor. As long as they continue to offer the 1.25%, I'll stick with it. After that, we'll see. 

1
Comment #20 by Anonymous posted on
Anonymous
I recently opened an account.T No probem w website. Checks arrived in the mail, Debit cards arrived quickly.  Very Satisfied!  I have been a Tiaa_Cref customer for over 30 years and think it is a Great company.  

1
Comment #21 by Anonymous posted on
Anonymous
Do they do a hard credit pull when opening? I don't want to take a credit hit if they drop the rate soon.

4
Comment #22 by unmesh posted on
unmesh
They have still not added POD Beneficiary support to the account :-(

3
Comment #23 by Anonymous posted on
Anonymous
This has to be one of the most difficult online savings accounts that I have ever tried to open.  After completing the lengthly application form, it said that my application had a problem and that I would have to call them.  I called them and after spending over an hour on the phone they said I was good to go and I even received an email conformation. I attempted to log on to my newely creataed account and I was rejected as it said that I had had too many logon attempts and that I needed to call them again.  i picked up the phone again and found out that they had gone home for the day and that I would have to call back another day.  I guess they haven't heard of 24-7 costmer service yet.  Hopefully when I call back I can get the problem resolved, otherwise I will just leave the account hanging and go someware else.

 

 

1
Comment #24 by Scott (anonymous) posted on
Scott
What is their ach limits and fees for transfers?

1
Comment #25 by Scott White (anonymous) posted on
Scott White
No way I would give these guys any money...just tried to call them 4 times...diconnect twice...lala land another time...then financial a-hole the last.  I did app on line and said I had to call.  I'll stick with Ally, AMEX, and Discover....whcih I maxed out on FDIC.  What idiots at this bank. Srry...but that was just my experience.  Crazy how companies and banks are now.  Such bad CS

1
Comment #26 by Anonymous posted on
Anonymous
I got the same message at the end of my online application which left me wondering what was going on.  I simply followed instructions, called the toll free number and "asked for assistance" the next morning.  The representative, Shay, couldn't be nicer.  She found my application and asked several identifying questions which I appreciated to secure my identity. She stayed on while I logged in (I did have to change my password which she helped me reset) and made sure I was "in".  It did take about 15 minutes on the phone to complete. In 7-10 days I will get my Welcome Packet and my ATM card.  After establishing your account you simply transfer money from other accounts.  Easy Peasy and great Customer Service.  And to Scott with his $750,000 he maxed out at Ally, AmEx and Discover, take a breath.

2
Comment #27 by mikek753 posted on
mikek753
Anyone able to use Quicken 2011 to auto download transactions from TIAA MM?

1
Comment #28 by Anonymous posted on
Anonymous
Haven't been able to download any transactions into Quicken.

1
Comment #29 by Anonymous posted on
Anonymous
What is an ach?

1
Comment #31 by FreeRadical (anonymous) posted on
FreeRadical
Signed up for a TIAA savings account last week, and couldn't be happier, especially compared to my old ING Direct account. The android app for check deposits works great (ING's was kind-of maddening). Checks deposited today become available tomorrow...ING had an inexcusable 7-day hold. For me, that's huge. $10,000 per day limit on checks deposited online, versus $3,000 for ING. And then, of course, there's the 50% higher interest rate (for now, anyway). I'm a happy camper.

1
Comment #32 by Anonymous posted on
Anonymous
Do they do a hard credit pull as part of the account opening?

 

1
Comment #33 by Manias posted on
Manias
Thier website now does not allow new accounts:

We’ve just concluded a successful pilot of TIAA Direct. Before moving on to the next phase, we will be making enhancements to the customer experience. During this time, we will not be accepting new account applications.

1
Comment #34 by FreeRadical (anonymous) posted on
FreeRadical
Yes, I just encountered that same "not accepting new accounts for the moment" notice when I attempted to augment my existing savings account (see my comments above) with a new checking account. It's probably a smart move on their part. While TIAA has a century of experience in retirement accounts, banking...and online banking...is a new departure for them. I would guess they are trying to avoid getting in over their heads, while they work the inevitable bugs out of a new system.

In case anyone from TIAA Direct is monitoring these comments, here are my current likes and dislikes:

1. Great rate. I realize 1.25% is a teaser rate which you will probably reduce soon enough, but if you keep leading the industry (by, say, at least 0.25 percentage points) I will stay with you...and, if not, I'll pull my six figures and chase the next top rate. Anyone who wants to be competitive in the internet savings game needs to realize that it is quick and easy for customers to vote with their feet. If you want to hold onto them, you have to be competitive.

2. Very good Android check deposit app, with just a few weaknesses. The ING app is annoying because a single check deposit requires something like 10 clicks to execute...that's absurdly bad design...whereas the TIAA app requires just a couple of clicks. Bravo. But TIAA's app falls short because (1) there's no 'exit' function...the app can't be conveniently logged out of and unloaded when I'm done using it; that's both a potential security breach and poor design. (2) There's no provision to add a memo to a check deposit. Memos help me organize my banking life; I like them. (3) There's no way to access the image of a deposited check. Combine that with the lack of memos, and there's no way to go back and figure out which check a deposit line item corresponds to. You've got the check image; just give me a link to access it.

3. Here's one where you could be an industry leader, instead of just playing catch-up: as with most online savings accounts, there's a limit of 6 withdrawals per month. No problem. But how about giving me a counter on my account's home page -- "You have X permitted withdrawals remaining through mm/dd/yyyy". That would be a big help; there's nothing worse than discovering, too late to do anything about it, that your money is suddenly locked up for the next several weeks. Again, this is information you already in your system; just go ahead and display it to me. ING doesn't do this, and neither does American Express. You could be a leader here.

3
Comment #35 by Anonymous posted on
Anonymous
any luck downloading into Quicken from TIAA?

 

1
Comment #36 by Anonymous posted on
Anonymous
Had my account there for about 6 months so far, still no POD forms available, i asked the rep if can have my attny draft something for them to attach to my account so this is not an issue, he said they cannot accept this either. 

If I recall correctly the bank accounts they offered in the past were for teachers only, im sure this has to have been an issue for them as well, their banking management team needs to at least allow customers to fax in something by paper if they cannot make this happen to be managed online. 


TIAA if you are reading this, be like Nike, JUST DO IT!

2
Comment #37 by Anonymous posted on
Anonymous
So far so good. Was able to get in back when They first opened the online account. Within 2 months of their opening It's been an enjoyable experience so far, and am very happy that no rate decrease has occurred since their inception. :)

1
Comment #39 by Anonymous posted on
Anonymous
Another rate cut, down to 0.91%...

1
Comment #40 by mikek753 posted on
mikek753
is this time to move out from TIAA?

How to do it after TIAA is placed very low transfer ACH ammount limit?

 

1
Comment #41 by unmesh posted on
unmesh
In my case, I used the checkbook I got from them.

1
Comment #42 by Anonymous posted on
Anonymous
Rate is now 0.75%. And getting your money out is cumbersome with TIAA's $5,000 limit on outgoing ACH transfers.

1
Comment #43 by Anonymous posted on
Anonymous
Don't use TIAA transfer system to get your money out.  Rather, pull your money out via the transfer system from your receiving (new) bank.

1