Dedicated to Deposits: Deals, Data, and Discussion
DETAILSINSTITUTIONAPYMINMAXPRODUCT
TIAA Direct0.50%$50k-Money Market
TIAA Direct0.40%--High Yield Savings
Accounts mentioned in this post. Rates as of April 24, 2014

TIAA Direct Cuts Rates and Announces New Limits on ACH Withdrawals

POSTED ON BY

TIAA Direct

After almost a year at 1.25% APY, TIAA Direct lowered the APY of its savings and money market accounts this week to 1.00%. This news only affects existing customers since TIAA Direct remains closed to new customers. There has also been additional news on TIAA Direct. Thanks to the readers who emailed me on this. Customers have received notice from TIAA Direct about changes taking effect on February 9, 2013. For savers the big change is a new $5,000 limit for ACH withdrawals initiated from within TIAA Direct. If you haven't received a notice in the mail about these changes, you can read about them at the bottom of TIAA Direct's deposit agreement. Here's the important excerpt:

On February 9, 2013, TIAA-CREF Trust Company, FSB is making the following changes that will apply to you and all of your deposit accounts.
[...]
You may not instruct us to process more than $5,000 in ACH withdrawal transactions from any or all of your accounts with us in one business day.

Currently, there is no limit on the size of ACH withdrawals. So this is a major change. I could see going down to a $250K or $100K limit, but a $5K limit seems extreme. I haven't been able to get a reason for this change from TIAA Direct. It is suspicious that this change is occurring right after a rate cut. For savers who don't have accounts at other internet banks, this could be a major issue especially if more rate cuts come.

One important thing to note is that this new $5K limit won't apply to ACH withdrawals initiated from another bank (i.e. an ACH pull). This has been confirmed with TIAA Direct CSRs. If you don't have another internet bank, you might want to consider either withdrawing your funds from your TIAA Direct account before February 9th or opening an account at another internet bank like Ally Bank or Sallie Mae Bank which allows for large ACH transfers. Another option for making large withdrawals after February 9th is by check if you have TIAA Direct's checking or money market account.

In July 2012 TIAA Direct stopped accepting new customers for its bank accounts. This continues to be the case as of today (1/12/2013). 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 was hoping this next phase would begin in early 2013. Perhaps these changes are in preparation for this next phase.

Another disappointment with TIAA Direct has been on the issue of designating beneficiaries. According to the bank's FAQs as of 1/12/2013, you still can't assign beneficiaries to your accounts. I was told in October that they expected to have this ready by December.

I hope the management at TIAA-CREF Trust Company is committed in making TIAA Direct a competitive internet bank. With the internet bank still not accepting new customers and with the recent changes, you have to wonder about its future.

  Tags: TIAA Direct, savings account, money market accounts

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Comments
33 comments.
Comment #1 by Anonymous posted on
Anonymous
Another one bites the dust!

9
Comment #2 by Anonymous posted on
Anonymous
The $5k limit will definitely affect my contributions to TIAA Direct as it is too rigid.

7
Comment #3 by Outer Space Guy (anonymous) posted on
Outer Space Guy
I wanted to open an account with them for a while, but they kept not accepting new customers.  So Ally got my money instead, and I am no longer looking for a new online bank.

From this website's description of TIAA Direct, I note:

Assets$1.97 billionLoans $44.67 million

So that leads me to wonder: what are they doing with all of that money that they already have on hand?  




Also, is it reasonable to think that they wanted to grow to be $2B in assets and stopped once they basically hit that number?

3
Comment #4 by Outer Space Guy (anonymous) posted on
Outer Space Guy
If you have a savings account with them, the new 5K per withdrawl limit might be huge in that you only get ... (what?  3? or) 6 free transactions per statement....?

 

6
Comment #5 by Tony (anonymous) posted on
Tony
Just got the letter today, but they didn't even bother to mention the rate cute.  Thanks for the heads up.  A big rate cut on top of new restrictions just made them unappealing. Time to look for somewhere else to move my money to...

6
Comment #6 by Kaight posted on
Kaight
Seems to me like TIAA is working hard to shed customers.  In my opinion, they will be successful beyond their wildest dreams.

11
Comment #7 by bbug (anonymous) posted on
bbug
Just moved funds from another account that lowered rates. ;-(

But, since the other account was Amboy Direct, which lowered rates from 1.25% to .75%, I guess I'm still .25% ahead.

It might be time to look for another 1.25% bank or credit union. I think I saw one mentioned here a few days ago.

2
Comment #8 by Anonymous posted on
Anonymous
I keep 4 savings account s and keep the most funds in the one that pays the highest rate. The others I keep a few hundred  $$  TIAA has most of my liquid funds.  I can still pull as much as I want from any of my accounts.  They are still paying 1% which is among the leaders.  Thanks for pointing this out (The unlimited pull).

3
Comment #9 by Anonymous posted on
Anonymous
Oh well.

Anyway, Ken says he was told by TIAA-Direct this will happen on 2/9/13, and that it will NOT be a "blockage" of pulls or pushes that TIAA accountholders might do from other finncial accounts to or from their TIAA accounts, but only from within TIAA.  Hope that is true.

In any case, on 2/12/13 I intend to attempt to pull $6K from my TIAA-Direct account TO another account with another financial institution (which clearly allows me to push/pull well over $5K into or out of it).  Just to make sure.

Normally I'd get all upset about this smackdown and complain to ya'll that I was going to move my liquid funds to "x" in a huff, but these days I can't figure out where "x" is in such a circumstance that it would not end up being more trouble to start a new account with "x", than it would be to just leave the $ with TIAA - IF the information about push/pulls from external accounts turns out to be valid.

 

4
Comment #10 by Anonymous posted on
Anonymous
I will we be transferring all my money after interest payment at the end of the month, and closing my account. Tired of waiting for the POD beneficiary and now TIAA is less competitive.

3
Comment #11 by Anonymous posted on
Anonymous
#10  At  %1.0 in this rate enviroment they are competitive

3
Comment #12 by Kaight posted on
Kaight
I would not post this except for what TIAA has done:

For those wanting to move funds, be reminded that Monday, January 21, 2013 is a Federal holiday.  It is Martin Luther King, Jr. day.

If (and only if) you have a lot of money to move, consider mailing a TIAA check to your destination financial institution via UPS or FedEx overnight service on Thursday, January 17, 2013.  Be sure your destination institution promises same day processing of deposits (many do).  Your check will arrive this coming Friday and you will earn double interest for four days (Friday, Saturday, Sunday, Monday).  This is a winning strategy I've used countless times, always ending with a smile, except:

Be very cautious NOT to use USPS Express Mail.  I know it's cheaper.  But they oftentimes deliver only to the destination institution's PO Box, regardless how you address the item.  If you use USPS Express Mail you risk actually losing money on this deal.  I speak from bitter experience here.  USPS Express Mail . . . never again!!  In order for this to work you need timely next day delivery to the destination institution itself, not just to their PO Box!

BTW, if you are among the super rich, if you have so much money that you would not bother, not stoop to using this strategy to make a few extra bucks, please do not be too tough on those of us out here doing the best we can.

3
Comment #13 by Anonymous posted on
Anonymous
This is not a hardship if you pull from another account.  One can pull from a regular checking account or open another online savings account you can use to pull funds (ex.  Amexbank, Sallie Mae) with a small balance..  I can't see what you are saving by spending over $20 overnighting checks. 

2
Comment #14 by Anonymous posted on
Anonymous
It's interesting to learn that we were involved in a "pilot project". No one told me that when I gave them my money. The interest rate is fair game, but the sudden restriction on transfers with only a few weeks warning and no explanation indicates they are probably withdrawing from the banking business, and just don't care what their depositors think of them.

They're certainly showing a total disregard for customer trust and satisfaction. Very strange for a company that has a stellar reputation in their core business, teachers' retirement services. I wonder if the parent company even knows about this behavior by the banking subsidiary. 

6
Comment #15 by Anonymous posted on
Anonymous
.

.

Dear Anonymous - #14,

For clinical trials on humans, "informed consent" is required from the subjects. 

... Alas ... looks like like no such thing is necessary when it comes to the assets of the human subjects undergoing a "pilot"!

Yours Truly,
Anonymous

3
Comment #16 by Kaight posted on
Kaight
Ken writes well and clearly.  He was especially clear that no withdrawal limitations apply now, or will apply in future, to ACH pulls.  Anyone wanting to do an ACH push from TIAA must not have a hub account, which is not smart.  The rest of us will simply continue to do ACH pulls and never have a problem.  For anyone having a problem with the change, with the upcoming $5000 limitation, let me say the problem is on you.

10
Comment #17 by Anonymous posted on
Anonymous
Slight correction to Knight, # 16 - Ken posted THAT HE WAS TOLD BY TIAA Customer Service Representatives that pulls from other accounts would have no $5K limit.   If I recall, those would be the same TIAA CSRs who have been promising for the last year or so that adding POD beneficiary capability to TIAA-Direct accounts was "just around the corner"? 

I'm not saying that there's not a better-than-even chance that we'll be able to pull from other (hub) accounts after 2/9/13.  I'm just saying, have a Plan B in case such ACHs do become blocked by TIAA, because although it is rare for a financial institution to do this, it CAN BE DONE.

 

4
Comment #18 by OC Steve (anonymous) posted on
OC Steve
Just like I always said in the past, TIAA with no POD vesting option was dead out of the water for me and my funds. This really is an experiment in frustration-- NOT READY FOR PRIME TIME.  Didn't waste my time with TIAA; used Sallie Mae Bank instead and have been very happy with them.

4
Comment #19 by Kaight posted on
Kaight
There is zero possibility TIAA will deny pulls of any amount.  But let's say I'm simply wrong.  Plan B is you write a check.  Big deal.

I've received decent service from the people at TIAA.  My only reason for pulling most of my money out now is the interest rate decline.  I don't hate TIAA.  But I'm willing to concede the outfit is a little quirky.  I've always attributed that to likelihood they are too inbred.  I think they are trying to do too much in house that they should farm out to experts . . . . which they most assuredly are not.  The TIAA folks are not the sharpest knives in the drawer.  But they are also not monsters.

6
Comment #20 by CapitalClimate (anonymous) posted on
CapitalClimate
The CSR assured me on the phone that they had been instructed to be clear that ACH pulls were not affected by any limit imposed by TIAA.  She also said that, although a date has not been announced, they will reopen for new accounts "soon", including trust accounts.  She could not give a reason for the 5K limit, but it seems to be a reflection of their very conservative operating practices (i.e., the many hoops to jump for a new account), not an indication that they are exiting the banking business.

4
Comment #21 by Anonymous posted on
Anonymous
I've read all these comments (though not memorized them). I don't like the ACH push limit either, but there is a simple, elegant solution suggested by the TIAADirect rep: change high yield savings account to money market account. The rates of the two accounts are identical and the latter has check writing capability. Finally, 1.00% APY is still fairly competitive (my other online savings account is only .80%). I see no reason to remove my money with the checking writing capability of the money market account. For amounts < 5,000 per day, use ACH; for amounts over, simply write a check. How hard is that?

1
Comment #22 by Moneypenney (anonymous) posted on
Moneypenney
Sure, there is no limit on ACH pulls NOW.  But they can change that at any time, with no notice.  Emigrant Direct did exactly that a few years ago.  One moment you're happily making payments via ACH withdrawl from Emigrant, the next day your payments are bouncing because Emigrant decided to block ACH withdrawals. 

So what is the reason for their February changes? Is it security?  Even if they still allow pulls, why would they consider third party pulls to be safer than THEIR OWN WEBSITE? 

2
Comment #23 by Anonymous posted on
Anonymous
Another option I was told by a TIAA Direct representative is that you could always "wire" any amount out of your account, though a wire costs $20. It doesn't seem to me the ACH push restriction is such a big deal.  Other concerns of changes in the future are just speculation and getting worked up over the unknown.  There will always be a way to get all of your money out of a bank when you want it (as long as the bank is solvent, and parent TIAA-CREF is not going under anytime soon), though there may be small fees or a few days delay. The inabilty of designating beneficiaries is more confusing. Don't understand why that would be such a big deal to implement. I'll continue with them for now, especially since I have a pull capability form Ally Bank.

1
Comment #24 by Anonymous posted on
Anonymous
Note that thw account has a limit of 6 withdrawls a month.  If you verify an account with them that sends small deposits to TIAA and then withdrawls thw money TIAA considers that a withdrawl (One of the 6)

1
Comment #25 by Joe (anonymous) posted on
Joe
The drop from 1.25% was too steep.  Also, the $5000 limit on transfers is scary if you need to get your money out in a hurry.  It's almost like a cd already! now looking at pen fed 1.25% one year cd.  Any comments on that? 

2
Comment #26 by Anonymouser (anonymous) posted on
Anonymouser
It seems obvious now.  They offered a rate higher than almost everyone to suck(er) in a whole lot of money.  Now that they have it, they lower the rate and make it harder to get the money out to prevent a run on the bank while they use the money.

And Feb. 9th is just about the time when most will receive their January statement and discover the rate drop.

It's the kind of thing I would have expected from the monster big banks, but I didn't expect this from TIAA.  I'm just glad there wasn't another rate cut Feb. 1st.  We'll see about March etc.

And to those who say if they start limiting ACH pulls too, just write a check.  Don't many places turn checks into ACH pulls?  If I try to deposit a check from a TIAA money market account into a local bank account won't they turn it into an ACH pull?

2
Comment #27 by Kaight posted on
Kaight
To #26:

Thanks.  Your post gave me a smile.  I've had a difficult day or two and you sound as besieged as I've been feeling.

Really I think it is, and will be, all OK for TIAA withdrawals.  Remember, they are limiting pushes only.  You can (by ACH or check) pull out whatever you want.  I speak from experience on this.  I have used both approaches to decimate my TIAA account.  It is now but a shadow of its former "self".  Of course, all my withdrawals were initiated from outside TIAA.  They didn't even offer up a whimper.  They just gave me my money straightaway and instantly.

I've found the people (the reps) at TIAA to be very helpful.  They are good with their customers.  The TIAA website, OTOH, has given me fits.   It still, after many months, does not work properly with Google Chrome.  So I would never consider initiating any financial transaction from their ****y website.  Anyone who does needs a hub account really badly.

3
Comment #28 by Anonymous posted on
Anonymous
Just FYI - I just successfully completed two transactions of six figure amounts from TIAA Savings & TIAA Money Market accounts to TIAA Checking - no problems, warnings, or any issues of the sort. Take it with a grain of salt because today is day #1 (Saturday, 2/9). Perhaps these regulations won't be enforced until Monday? Adios, TIAA. It's been real.

1
Comment #29 by Anonymous posted on
Anonymous
Rate has been dropped to .92% without notice (thank you to Mint.com for the alert).

2
Comment #30 by Anonymous posted on
Anonymous
Sorry - dropped to .91%, not .92%

2
Comment #31 by Anonymous posted on
Anonymous
No issue in pulling separate five figure ACH TIAA-Direct withdrawals initiated from two outside banks.

1
Comment #32 by CapitalClimate (anonymous) posted on
CapitalClimate
Again without notice, the rate has dropped to 0.75% .

2
Comment #33 by Anonymous posted on
Anonymous
I just closed my accout with them.  Moving my money back to USAA.

2
Comment #34 by Anonymous posted on
Anonymous
 

I was a former TIAA Direct Money market customers prior to the pilot close, just left for Sallie Mae Bank.

Why did I leave?

1. Money Market Rates continued the downward spiral, .99, .78, .54 in just the last 4 months, some months weren’t guaranteed the full higher rate, making rate decreases mid month.

2. Sallie Mae has not budged on their rates since April 2013 and current is still the same

3. Tired rates still were not competitive for large depositors, even exchanging to a short term CD wasn't competitive

4. If you do a full transfer, any accrued interest is forfeited, make sure you do an ACH in the beginning of the month.

 

 

1