Xinja’s high interest Stash accounts are popular. So why did the challenger bank stop opening them?
In a new blog post Eric Wilson, Xinja’s founder and CEO, explained that the company decided to stop opening new Stash accounts because of the Reserve Bank of Australia (RBA) dropping the interest rate by 0.25% paid on money to 0.5% as the stock market dealt with increased volatility caused by COVID-19 fears and panic on the oil markets.
“Like any business Xinja has to keep control of its costs and when a bank gets lots of deposits and the RBA cuts interest rates, that makes costs go up,” Wilson said.
“When faced with higher than expected deposit flows and an RBA rate cut, most banks would just drop deposit interest rates, hurting existing customers while chasing new ones. That’s not what Xinja is about.
“We have decided to take a different path. Because these are uncertain times for everyone, we are holding our rate steady, at 2.25%, but hitting the pause button on customers opening Stash accounts.
“No more new Stash accounts means no increase in cost to Xinja and means we can protect the interest rate for people already with a Stash account.
“So Xinja customers with a Stash account are unaffected and get to keep the same rate. Xinja bank account customers without a Stash account will be given first priority when Stash reopens (we are hoping in a couple of months), and anyone can open a Xinja bank account as normal.”
The news comes just days after it was reported that Xinja had opened it new Series D round for what it described as “sophisticated” and “wholesale” investors. The neobank is currently crowdfunding on the Equitise platform and is looking to raise a total of $50m.
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