By John Reynolds on Monday 11 May 2020
Xinja said the reason for the cut was due to Australia's central bank cutting interest twice in January.
Australian neobank Xinja Bank has cut the interest rate on its high-yield savings account from 2.25 per cent to 1.8 per cent.
Xinja said the interest cut on its Stash savings account to 1.8 per cent will be introduced on 11 May.
Xinja launched the deposit Stash account in January this year and its rate of interest meant it was the highest rate on offer in Australia.
It said the reduction in the interest rate is due to the Reserve Bank of Australia, the country's central bank, cutting interest twice in March- on March the third to 0.50 per cent, and then to 0.25 per cent on March 19.
“We held the rate at 2.25 per cent despite successive rate cuts from the Reserve Bank, and we are probably the only bank to have done that,” said Xinja CEO 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."
Xinja, which entered the market in 2017 and was granted a banking licence in 2019, stopped issuing new Stash accounts with an interest rate of 2.25 per cent at the start of March.
In January we reported that Xinja, along with challengers Judo Bank and 86 400, had accrued over A$1bn in personal term deposits, boosted by their high interest rates.