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.
|If Your Balance is:||Interest Rate||APY*|
|Less than $10,000||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.
- 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.
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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