Australia-based digital-only mobile bank Xinja Bank has decided to cut down the interest rate on its Stash savings account to 1.8%.
The move will be effective from 11 May 2020.
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Xinja Bank launched its Stash account on 16 January 2020 with an interest rate of 2.25% as against the country’s official cash rate of 0.75%.
Since then, the Reserve Bank of Australia (RBA) has cut rates twice; first on 3 March to 0.50% and then on 19 March to 0.25%.
Xinja Bank founder and CEO Eric Wilson said: “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.
“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.
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By GlobalData“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.”
In its press release, Xinja stated that Stash remains a ‘no strings attached’ account with no complex terms or conditions to be met to earn 1.8% interest.
Moreover, customers need not maintain a minimum balance, and there is no minimum spending as well.
The bank, which has over 47,000 accounts and $500m in deposits, claims that customers can earn 1.8% on every dollar in Stash, up to a maximum of $245,000.
The interest is calculated daily and paid on a monthly basis, the bank added.
Xinja Bank, which gained its full banking licence last year, is planning to launch a series of new products this year such as personal loans in August.
