- Xinja has finally cut its high-interest savings rate from 2.25%.
- The neobank told customers on Thursday it would be reduced to 1.8% from next Monday but would remain without conditions.
- It comes after Xinja held out for two months against two RBA cuts, even stopping customers opening new savings accounts in order to do so.
- Visit Business Insider Australia’s homepage for more stories.
There’s not going to be a 2% savings interest rate left in the country, as neobank Xinja announces it won’t be offering its market-leading rate beyond this week.
“We are going to move the interest rate on Stash from 2.25% to 1.8% on Monday May 11,” Xina told customers in an email update on Thursday.
The neobank had held onto its rate, the highest in the country, for months despite two cuts by the Reserve Bank of Australia (RBA), believing itself to be “probably the only bank in Australia to have done so”.
“We hope the two months of extra interest has been helpful and maybe eased a few worries over these strange times,” it said.
Fortified by a $433 million cash injection from Emirates’ World Investments, the digital bank even went as far as to prevent customers from opening a high-interest account if they hadn’t already done so.
“We did that as we said, because in uncertain times, and given many of you had only recently opened the account, we thought it was the right thing to do to protect our current customers rather than chasing new ones, and we achieved it through hitting a pause on opening any new Stash accounts,” Xinja said.
But despite throwing out all the stops in a bid to reward early adopters, it was ultimately an untenable position long-term, with Xinja itself acknowledging it couldn’t “ignore two RBA cuts indefinitely”. As Business Insider Australia had pointed out previously, paying that kind of interest on around $350 million in deposits — now $500 million — would cost it millions per year.
Without offering loans and without charging customers fees, Xinja isn’t making money right now. Even the healthiest of capital injections couldn’t let Xinja hang onto that kind of interest rate forever.
Even with the reduction to 1.8%, Xinja is still sitting near the front of the pack. As Xinja crows, “our new rate still smashes the big banks and is without the usual conditions that some banks impose.”
It is however now positioned far closer to other rival digital banks. 86400 and Up Bank for example are currently offering slightly more with 1.85%, but requires customers to meet certain conditions. For 86400, that’s depositing $1,000 per month into your savings account. Up customers have to make 5 transactions per month to get theirs.
Volt, while not yet launched to the public, has brought on customers from a waitlist, paying them 1.65% with no conditions.
While perhaps a little diminished now, compared to the big four, all the digital banks are still leagues ahead.
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