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Fintech

Xinja cuts the cap for paying interest on its Stash account once again to just $50,000

- November 17, 2020 2 MIN READ
Photo: AdobeStock
Less than a year after “Australia’s best savings account”, the high interest rate on Xinja’s Stash savings account appears to be a millstone around the neobank’s neck, with the fintech slashing the interest-bearing cap by two-thirds to just $50,000 on any deposits.

With the launch of Xinja US share trading platform Dabble now delayed indefinitely, and the digital bank yet to offer lending, the 1.5% interest offered to Stash account customers appears to be burning a hole in the neobank’s balance sheet, especially after the RBA cut the official cash rate by 15 basis points earlier this month to a new record low of just 0.10%.

The new $50,000 cap for interest of Stash account deposits kicks in on November 23. It was only a month ago that Xinja cut the interest rate offered for a fourth time in nine months, alongside reducing the cap on money you can earn interest on by $95,000 to $150,000. It launched at the start of 2020 paying 2.25% interest on up to a $245,000 cap.

The bank, which launched in 2018, received its full banking license in September last year, has yet to begin lending to customers, and by March this year had $450 million in deposits from 45,000 accounts on its books. That month, when the RBA cut rates to 0.5%, Xinja put a freeze on anyone opening a Stash account, having seen $400 million flow into the “Stash” accounts in just 8 weeks.

In a blog post last month, the company’s customer experience director, Camilla Cooke, said Xinja is launching Dabble, its US Share trading product, “soon: and personal loans “not that long afterwards”.Last week the bank added a note that the launch of Dabble, which was originally scheduled August, “has been delayed and exact date of launch is yet to be confirmed”.

In March, following a $50 million crowdfunding round, Xinja announced a $433 million investment over two years from Abu Dhabi investment company Emirates’ World Investments, which tipped in $160 million immediately, with the remaining A$273 million available to be drawn down in multiple tranches over the next two years.
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