Dedicated to Deposits: Deals, Data, and Discussion

TIAA Direct Stops Accepting New Customers

POSTED ON BY

TIAA Direct

TIAA Direct has stopped accepting new customers for its savings and money market accounts. Here is what TIAA Direct states on its website:

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.
  Tags: TIAA Direct, savings account, money market accounts

Related Posts

Comments
11 comments.
Comment #1 by Anonymous posted on
Anonymous
I recently opened an account at a bank through the online application process.  I could not designate a beneficiary on the online process, but they allowed me to enter that information on a paper form that was mailed back to them after the account was opened.

4
Comment #2 by Anonymous posted on
Anonymous
I have to call...I'm already a TIAA-CREF member for 15 years...wonder if this "qualifiess" me or must have been a "TIAA Direct" existing member??  I hope they are not making folks jump thru hoops... considering a 1.25 rate (ok not bad jusst now)...but we are in a time frame where a years earnings doesn't cover a wire-cost or even an overnight/Fedex or Regged letter cost.   I noticed this AM, the 10-year bond was at 1.44%- "Makes one wonder"!

4
Comment #4 by Anonymous posted on
Anonymous
If you don't like it go elsewhere

10
Comment #5 by nothlit posted on
nothlit
Well, this is a bummer. I was just about to close my People's United RCA now that their rate has fallen to 1.5%, in spitting distance of TIAA's savings account rate. Guess I'll have to rethink that plan.

3
Comment #6 by Anonymous posted on
Anonymous
Answer to my (above) as #2.  The answer is "NO" having a membership with TIAA-CREF (even 15 years) does NOT qualify and thus we/you cannot open a new TIAA Direct account...even though the CSR admitted they are the same company.  ODD!  no matter

 

Bob

3
Comment #7 by OC Steve (anonymous) posted on
OC Steve
They were not ready for prime time anyway.  Until and unless they make accomodations for opening new accounts as POD/ITF or in the name of a Living Trust, they are not worthy of our business.  Thinking of them as a "hobby" bank.

3
Comment #8 by Anonymous posted on
Anonymous
This is a not a good sign, next step would be to cut the rates and then chase the customers away.

6
Comment #9 by Anonymous posted on
Anonymous
Loving my TIAA Direct savings account. Web site works well, so does online check deposit; transfers and deposits are very quickly credited and available (like, next working day). That, plus I'm earning the best rate in the industry. I applaud their intent to manage growth other than by downgrading to sucky interest rates.

4
Comment #10 by Anonymous posted on
Anonymous
I bank with TIAA, theyre great. Super helpful customer service (I only once got someone unhelpful, and i just called back and got someone who was). Best rates, and i like banking online. Hope they don't drop rates; wish i had found them sooner!

2
Comment #11 by Anonymous posted on
Anonymous
TIAADirect will start allowing designation of account beneficiaries before the end of the decade.  You wouldn't think it would be as hard as putting a man on the moon.

1