I read the news on one of the personal finance websites. There’s someone offering 1.25% APY on saving account! Got curious and started with my investigation. The first thing that stuck out to me for Tiaa Direct saving account was a PO box for a bank’s address!
I mean, are you kidding? I haven’t seen a bank’s physical address pointing to a PO box! I decided to read, experience and then write a review about TIAA Direct savings account.
One good thing, this bank TIAA Direct is TIAA – CREF group company. Tiaa CREF is a reputable name in teachers’ community and they are well famous for the non-profit charity work.
Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA–CREF) is a Fortune 100 financial 
services organization that is the leading retirement provider for people who work in the academic, research, medical and cultural fields. TIAA–CREF serves 3.7 million active and retired employees participating at more than 15,000 institutions and has $453 billion in combined assets under management.(as of December 31, 2010).
Now that we know this is not a fly-by-night bank and being FDIC insured, your deposits are safe. Let’s go in to deeper level and find out how wise would be your decision to put your deposit in to Tiaa Direct saving account.
Rates
| If Your Balance is: | Interest Rate | APY* |
|---|---|---|
| Less than $10,000 | 1.24% | 1.25% |
| $10,000-$24,999.99 | 1.24% | 1.25% |
| $25,000-$49,999.99 | 1.24% | 1.25% |
| $50,000+ | 1.24% | 1.25% |
Now the big question is how long would the rate remain that high. Lately this has been the trend for any new bank. Capital One, American Express, Ally we have seen this with all new banks. They start off with a high interest rate to attract new deposits.
Once they secure enough deposits, they tend to start bringing the interest rate down. Bank promises high interest rate to lure you in then drops it after a few months. TIAA-CREF, although non profit still has to pay overhead and expenses. Non profit, credit union or bank status really is meaningless in regards to how rates hold up.
Be particularly careful with Tiaa Direct account though. There’s a monster hiding behind their rules, in the form of a ‘inactivity fee’. Which has potential to stop any sort of interest and eating out your capital in the bank.
Although the inactivity fee is only $2 after 12 months of dormancy, the fee is easily avoidable. In future this may increase. And by the fact that this type of fee is present is making me nervous about Tiaa Direct saving account.
If you want to dump some money which you’ll need in a year or two. I honestly suggest you to chase rates after all your money would go at a higher rate.
The caution here is, to get a few percentage point better rate you may not risk losing its capital value to the fees. A 1% APR discover bank account without a penalty fee is far better proposition than Tiaa Direct 1.25% saving account.
Services
- Bank anytime, anywhere with Online and Mobile Banking
- Deposit checks from your iPhone with Remote Deposit
- Withdraw money at more than 400,000 ATMs with free transactions at over 23,000 ATMs in our network
- Get Alerts to keep track of your balance and monitor transactions
- Link this account to your Interest Checking account for Overdraft Protection
Do keep in mind that not all ATM transactions are free.
Experience with Tiaa Direct savings account
Account opening is smooth and fast. The money got pulled from bank account in less number of days than my other savings/checking account did.
There is weekend phone support available for those hard-working professional who tend to do personal finance stuff over the week-end.
Mobile deposit app available, but iPhone only at the moment, with Android app is on the way. One annoyance is Mint and Yodlee doesn’t currently support their banking accounts at the moment.
The account has only $25 as the minimum deposit amount required for opening the balance, and I did open my account with exactly the minimum balance. One caution is, until your online account shows your deposit balance, do not try to balance transfer between Tiaa Direct and other bank account. You’ll be charged a fee otherwise.
Overall we are assigning a “Wait and watch” rating to Tiaa Direct Savings accounts for the time being.
Note: Savings and money market accounts are not necessarily investments. With the interest earned you can never beat the official rate of inflation. The purpose of savings in such accounts is to have cash ready at an instant, either for an emergency or for impending spending, like purchasing a car within a year or few months.
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Disclaimer: Finance Product Reviews is an independent website. Although we may have advertisement relationship with financial institution we review, they do not influence our decision or rating of products. Contents of this site are not provided by any financial institution, banks, brokerages or credit card issuers. Opinions expressed here are author’s alone and are not reviewed, approved or otherwise endorsed by the product owners.
That TIAA-CREF website ad with the P.O. Box sounds like an obvious scam. In any case, TIAA-CREF is a great savings plan for teachers, and has great benefits. Thanks for sharing this complete picture in your review.
Since its FDIC insured, you can’t be scammed though.
It’s really annoying when banks drop their rates after they’ve secured enough deposits. I detest when they do that!
1.24% is pretty impressive though.
yes it is!
1.24% sounds really appealing to me since my current accounts are making me basically nothing right now.
Yeah its almost the highest offer now. But watch out for the rate drop..
IMHO ,, avoid this outfit …
1) “uncompleted” online enrollment application for joint-account
resulted in “account lock-out” in which phone reps & supervisors
were NOT able to remedy; even after two days.
2) The Bank’s Phone Reps are only permitted to communicate with “customers”
via their web-mail, once you log-in to your account. geeze.
3) Their technical skill level is low and “procedures” are arbitrary and annoying.
[…] liked the pledge, frankly I haven’t seen any other bank doing that. As I mentioned in my Tiaa direct Review, banks usually offer high rates in the beginning to entice new depositors, only to drop the rates […]
[…] A.M. Best Affirms Ratings of Teachers Insurance and Annuity Association of America and Its Subsidiary – B4theStreetGroup Life And Health Insurance CompanyInsurance Coverage Boca Raton AmphitheatreCFP Salaryhttp://www.tiaadirect.com/banking/bank/savings/index.html […]
im thinking about starting a savings account and i saw this tiaa direct on clarke howard and thought it might be a good idea. just a basic saving nothing really planned with the money. is this the account for me?
Upto you Annie, our opinion is already stated.
I have been trying to fund my account for two weeks now, but they can’t get it together. I opened one with CIT the same day to spread the decent interest wealth return, that got processed immediately. But these jokers, much as they are nice as pie on the phone, are a trainwreck. Error after error after error…
TIAA Direct Drops Savings Rate, Imposes Withdrawal Limits
TIAA Direct, the online banking division of TIAA-CREF, has slashed the rates of its savings and money market accounts from 1.25% APY to 1.00% APY. This rate affect existing customers. The online bank stopped accepting new customers as of July 2012.
Additionally, in mail notices to customers, TIAA Direct said that ACH withdrawals will be limited to $5,000 per day, effective Feb. 13, 2013.
[…] you. But if you are a rate chaser, like me, you may fund better rates else where. We reviewed Ally, TIAA Direct and EverBank which pays better than […]
TIAA CREF and it’s subsidiaries are unethical companies. I would NOT recommend banking or investing with them… I’m still trying the untangle the mess that they’ve created for me. Also, I had done my checking with them for a year. Their fraud department froze my account after I simply accessed my own money through 3 ATM withdrawals. They did not notify me and apparently had no plans to notify me. They left me to figure this out when my bills and other transactions were declined and I started getting hit with returned item fees. Even after speaking with customer service, they had no clear idea of what the issue with my account was or how to resolve it. EVENTUALLY after days of phone calls I got through to the horrible person in the fraud department who had frozen my account and then gone on vacation, Donricka Simmons. FINALLY I though everything would return to normal – not so. These are just the most idiotic people, completely lacking in common sense, working with a terrible system. It’s been 6 weeks and I’m still trying to straighten out all of the problems they caused for me by removing my access to my own account.