Source: Xinja Bank
Xinja Bank, which is 100% digital and built for mobile, will move the interest rate on its Stash savings account to 1.8%, effective May 11.
Xinja launched Stash with a 2.25% interest rate on January 16 when Australia's official cash rate was 0.75%. Since then, the RBA has cut rates twice: first on March 3 to 0.50% and then to 0.25% on March 19, but Xinja has not dropped its rate until now.
"We held the rate at 2.25% despite successive rate cuts from the Reserve Bank, and we are probably the only bank to have done that," said Xinja chief executive and founder Eric Wilson. "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.
"However, it is a variable rate, and we can’t ignore two Reserve Bank rate cuts indefinitely. That said, our rate remains very competitive, and without conditions that banks typically apply to higher interest rate accounts," Mr Wilson said.
Stash remains a 'no strings attached' account: no complex terms or conditions must be met to earn 1.8% interest; there's no minimum balance required, no minimum spend, and customers don't have to access their account a set number of times to ensure they qualify for the rate.
Xinja's Stash customers will earn 1.8% on every dollar in Stash, up to a maximum of $245,000. The money is at-call. Interest is calculated daily and paid monthly.
Xinja Bank gained its full banking licence in September 2019. The bank was built from scratch and launched just after the Australian government announced changes in May 2017 to the banking sector to encourage greater competition.
Xinja has a series of new products planned for the rest of the year, including personal loans in August.
Like all Australian banks, the Australian government guarantees Xinja deposits up to $250,000 per account holder.
Xinja Bank has over 47,000 accounts and more than $500 million in deposits.