Update on TIAA Direct and Its Online Savings Accounts

Many DA readers who had opened an account at TIAA Direct have been waiting for TIAA Direct to allow beneficiaries. Last month I was told by my TIAA Direct contact that they are still working on it. Yesterday, a reader forwarded me a reply she recently received from a TIAA Direct CSR regarding this issue (hat tip to the reader). According to the CSR, they will start allowing beneficiaries in December 2012. Below is an excerpt of this reply:

We recognize the importance of allowing our customers to designate beneficiaries for their TIAA Direct deposit accounts, and this is one of our current top-priority items. We are working with our production team to ensure that all processes are in place and functioning properly before we make this capability available to our customers. We expect that you will be able to add one or more beneficiaries to your TIAA Direct deposit accounts December 2012 and we can contact you as soon as this functionality becomes available.

I'm not sure why this is taking so long. Customers have been waiting for this since February.

At first TIAA Direct accounts were limited to TIAA-CREF employees, but before the end of February 2012, TIAA Direct was allowing anyone in the nation to apply.

In July TIAA Direct stopped accepting new customers for its bank accounts. This continues to be the case as of today (10/8/2012). They continue to claim that this was just a pilot of TIAA Direct, and before moving on to the next phase, they "will be making enhancements to the customer experience." I wonder if this next phase may take place in December.

Even though new customers can't apply, there were no changes for existing customers. TIAA Direct's savings and money market accounts still have a 1.25% APY as of 10/8/2012. Except for the beneficiary issue, DA readers have reported being happy with their TIAA Direct accounts. One reader wrote the following comment in September:

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).

Hopefully, TIAA Direct customers will soon be able to add beneficiaries, and new customers will be able to apply. Until that time, you can find savings and money market accounts with top rates that are available now in our savings account table and money market account table. Most internet banks allow customers to designate beneficiaries. One of the rare exceptions is ING DIRECT which still doesn't allow customers to designate beneficiaries.