TIAA Direct Stops Accepting New Customers
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.
If you’re already a customer, you can still log in and manage your accounts as usual.
Thanks to DA reader Manias who mentioned this news in the comments.
I spoke with a TIAA Direct official to learn more details of this news. For those who have TIAA Direct accounts, I was told there are no immediate plans to reduce the rate, but as before, the rate is subject to change at anytime. They plan to keep the rate competitive. Apparently, the number of signups during this pilot phase exceeded their expectations, and they want to take more time to incorporate customer feedback before they move into the next phase. They do plan to open it back up to the public with an official launch, but they were not able to give me a time frame when this might occur.
I first reported on TIAA Direct and its 1.25% APY savings and money market accounts in February. Since that time, the yield has remained at 1.25%.
At first these bank accounts were limited to TIAA-CREF employees, but before the end of February, TIAA Direct was allowing anyone in the nation to apply. One issue that irked a lot of readers was the bank's inability to designate beneficiaries on the accounts.
I'm hoping TIAA Direct won't take too long before it officially launches and allows new customers. It does appear they are in it for the long run. Of course, you never know when management may change their minds. We have seen cases when financial companies lost interest in their internet banks. This happened with E*Trade and E-LOAN. Both used to offer very competitive online savings accounts. Now their rates are way below average for online savings accounts.
There have been cases in the past that a new internet bank went through periods in which it stopped accepting new customers. One example is SFGI Direct. It was launched during the summer of 2009 with a 2.25% APY. My first report on the account was in July 25, 2009. The bank was careful not to let SFGI Direct grow too fast. Twice it stopped accepting new account applications. For most of 2010 the account was closed to new customers. It finally reopened the account in October 2010, and it has remained open since that time with a competitive savings account rate.
Banks sometimes choose to reduce deposit growth by lowering rates. Stopping new applications is a better approach in my opinion. Hopefully, that means this 1.25% APY at TIAA Direct will continue for a long time.
Update: I almost forgot to ask the TIAA Direct official about the status of beneficiary designations. Here is what I was told:
We are in the process of implementing functionality that will allow the addition of several types of beneficiary information. We plan to roll out this functionality as soon as we can.
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