TIAA Global Growth Marketsafe CD is to be Avoided
Image Courtesy: Business Wire

TIAA Global Growth Marketsafe CD is to be Avoided

Back before TIAA acquired Everbank, the latter made a name for itself issuing CD products that were aimed at unsuspecting, ill-informed customers looking for exposure to emerging markets and/or their currencies.

I warned customers about these emerging markets-based currency products back in 2014 here and again in 2017 here and again earlier this year here.

A constant theme highlighted in my articles has been that these products are not CDs at all and that their issuance may be illegal, violating the 1933 Securities Act. I maintain that position.

Another recurring theme is that depositors should steer clear of these products. Those few who did not find my articles and walked into Everbank’s trap are now sitting on broken products, hoping to recover some or all of their principal at maturity and consulting tax attorneys or accountants about how to handle the Original Issue Discount forms that Everbank (now TIAA) sends them for interest they will never receive.

Yet, Everbank, now renamed TIAA Bank after its acquiror, is at it again! The latest product looks up your hard earned money for 4 years and is virtually guaranteed to fail. The basket of five currencies upon which it relies (the Brazilian real, Indian rupee, Chinese yuan, Mexican peso and Russian ruble) are almost certainly going to decline against the dollar over the next four years, and the only measurement date is at maturity in 4 years. For TIAA Bank as the issuer this product is a safe way to attract long-term capital interest free from unsuspecting customers as the trajectory of emerging market currencies over a period of this length always leans towards a significant devaluation.

I recommend anyone looking for an example of the lengths to which people will go to sell crocked financial instruments watch the video trying to sell this product. The TIAA representative’s case for the buying instrument is based on the specious argument that “what goes down must go back up” combined with the appeal that they have done people a favor by omitting the Argentine peso and the Turkish lira from this one.

Bottom Line: All of these TIAA (previously EverBank) so-called CDs are bad, very bad. Folks who bought EverBank’s Icelandic Krone CDs got scalped in 2008. Even if TIAA didn’t know well enough to discontinue this program, the good news is that you now know to avoid it.

See all real 4 year CD rates here.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Bank Product Term Interest Rate (APY)
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Comments

  • Jeff Hatchwell

    October 05, 2018

    Back in the day, I bought a note from Morgan Stanley that paid 2% in the Brazilian real was below a certain target versus the dollar and 10% it is was above. The note was three years and measured on December 15 each year. I know it beat the target one year and I think it missed it on 2. Still I made 14% over two years. It was a fair risk-reward scenario at the time but I would not make the same bet on the real today. TIAA isn't providing a fair risk-reward scenario here. I am sure you can get a better product from someone like Morgan, Schwab or Merrill Lynch today if you want to play this game.

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