Neobank Xinja further slashes interest rates on Stash accounts

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In the middle of the COVID-19 pandemic, neobank Xinja is cutting the interest rate on its savings accounts once more. It is also slashing the amount of money its customers can earn interest on by $95,000. The new development which was enforced earlier this week, will make this the neobank’s fourth interest rate cut in the nine months since Stash was launched as “Australia’s best savings account” amid a large amount of publicity. Earlier, the Stash account was paying 2.25% interest on up to a $245,000 cap.

Neobank Xinja cuts interest on high-yield stash accounts

In the latest news in the world of finance, there are reports that Xinja Bank’s Stash account would be slashing its bonus variable rate down from 1.65% to 1.50% [1]. Since March, Xinja has not taken on new customers, nor has indicated when it plans to resume onboarding of new customers.  

As the Coronavirus pandemic hit and the RBA reduced the official cash rate  to 0.5% by 25 points, Xinja froze the opening of Stash accounts. Further, in May Xinja Bank cut the interest rate by 0.45% to 1.8%. Again, it was brought down to 1.65% after the second 25 point rate reduction by RBA. Last week, it quietly unveiled the fourth cut to 1.5%. In the present scenario, the biggest hit for the neobank’s early customers who dropped up to the $245,000 limit into their Stash account is the loss of interest payments on $95,000. Xinja has reduced the cap on the total amount that interest can be earned on to $150,000.

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About Xinja

After a whopping $50 million crowdfunding round in March this year, Xinja declared a $433 million investment over two years from Abu Dhabi-based investment company Emirates’ World Investments. The investor tipped in $160 million immediately. The remaining A$273 million would be made available to be drawn down in multiple tranches for funding Xinja’s growth over the next two years. 

According to Xinja Bank’s Customer Experience Director, Camilla Cooke, the bank was also shutting down the Trello roadmap it had opened in July 2019 for public scrutiny. She stated that the neobank does not wish to continue setting expectations that they might not be able to meet. Additionally, she claimed that Xinja is moving towards adding products to the ecosystem and away from multiple bank account features. Hence the format of the Trello roadmap that was based on the rapid iteration of one product, was micro and irrelevant. Cooke revealed that Xinja would soon be launching Dabble, its US Share trading product, as well as personal loans not too long after. However, she declined to divulge any further information, citing competitive reasons.

Source:

[1] Business Insider (2020) “Three Australian neobanks cut the interest rate on their high-yield savings accounts” [Online] Available from: https://www.businessinsider.com/australian-neobanks-cut-interest-rates-on-savings-accounts-2020-10?IR=T  [Accessed October 2020]

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