Xinja is closing down, what does this mean for customers?
Xinja is closing its bank account and Stash savings account and returning its banking licence. Here's what you need to do to if you're a customer.
Australian neobank Xinja has announced it is shutting up shop and returning its banking licence, meaning it will no longer be a bank. It will be closing down its Xinja bank account and Xinja Stash savings account in the coming weeks.
If you've got money in a Xinja bank account, don't worry, you'll get it back. Xinja was a licensed bank and therefore the money in its accounts (up to $250,000 per customer) is protected by the government under the deposit bank guarantee scheme. However, there are a few things you need to do to get your money out of your Xinja account.
How to get your money out of your Xinja bank account
You can no longer top up your Xinja bank account. From 23 December you won't be able to make automatic transfers and deposits either. So if you've got money regularly being deposited into the account (such as your salary), you need to cancel this direct debit and set it up with another bank account. This is also the case if you've got money being taken out of your account for things like rent or regular bills.
You also need to transfer your money out of both your Xinja bank account and Stash account into another bank account, as Xinja won't be doing this for you. Xinja has advised customers to move their money out by 6 January 2021. The bank has said that your debit card and Pay facility (which is the feature that allows you to transfer funds out of your account into another bank account) will not work after 15 January 2021. However, I wouldn't wait until then to move your money out, this is the absolute deadline.
If you do have any money deposited into the account after 22 December (for example if a friend transfers you money to your Xinja account), the money will bounce back to the person who sent it.
How to get money out of your Xinja Stash account
Xinja stopped allowing new customers to open a Stash account way back in March. But if you already had a Stash account and you've still got money in it, you need to take it out.
To do this, transfer it from your Stash account into your Xinja bank account. Xinja has said you need to do this by Wednesday 23 December as this is when the Stash accounts will be officially closed. The money in your Stash account has stopped earning any interest (as of 15 December), so there's no advantage to leaving the money in there any longer.
Once the money is in your Xinja bank account you need to transfer it all out and into a different bank account. Once all the money is out of your Xinja Stash and Xinja bank accounts, they'll automatically be closed by the bank so there's nothing else you need to do.
Why is Xinja closing its accounts, and what about the other neobanks?
Xinja has voluntarily decided to close its bank accounts and hand back its banking licence. Xinja does not have a lending product in the market, such as a home loan or credit card product, to offset the money it's been paying to customers in interest on Stash accounts.
Xinja says it will continue to work on its US share trading platform Dabble, with no confirmed plans to shut this product down yet.
Fellow digital bank 86 400 received its banking licence just a couple of months ahead of Xinja in 2019, and has since launched a bank account, savings account and home loan to the market. CEO and founder of 86 400 Robert Bell told Finder that running a bank is tough work, but ensures customers they're confident about their products and business model.
"Running a bank is not an easy business. Even with sufficient capital, the right team and technology, there are many hurdles to overcome that simply don't exist in other industries. But it's vital there are companies willing to take on these risks, to help bring competition to the sector and deliver better outcomes for customers," Bell told Finder.
"While there's always been healthy competition between us and the other neobanks, we all agree that choice is a good thing. Australians are crying out for new and smarter ways to manage their money. It's sad to see a little less choice in the market today, but it underlines the importance of what we're building: a smarter alternative to traditional banking, purpose-driven to help Australians feel in control of their money both now and in years to come."
"Our momentum hasn't slowed this year. We have an ambitious product pipeline that we're delivering on, despite external challenges, and are continuing to grow our lending product. We have close to $200m in home loans settled and awaiting settlement, and growing quickly. November was our largest month for home loan applications. For us, this is a key factor in the path to profitability," he said.
Where to put your money instead
A lot of customers flocked to Xinja because it offered a market-leading interest rate on its savings account, with few conditions to meet. If you're looking to earn as much interest as possible on your savings, the current highest rate in the market is 3.00% p.a. with a Westpac Life account. If you're between 18 and 29, you can earn a 3% p.a. variable rate each month you grow your balance (excluding interest) and make 5+ settled debit card purchases from your linked Westpac Choice account, up to a balance of $30,000.
If you're over 30, you won't qualify for this bonus rate with Westpac. MyState offers 1.35% p.a. on its Bonus Saver account each month you deposit just $20 and make 5+ debit card purchases. The good thing with this account is that you'll earn bonus interest on balances up to $250,000 (Xinja Stash only offered interest on balances up to $50,000).
ING Savings Maximiser also offers 1.35% p.a., but this is only available on balances up to $100,000 and there are a few more account conditions to meet. You need to deposit $1,000 a month, make 5+ debit card purchases and from March 2021 you'll also need to grow your balance each month.
If you want to switch to another digital bank, 86 400 offers 1.20% p.a. on its Save Account when you deposit $1,000 a month.
If these options aren't right for you, you can compare a range of bank accounts and savings accounts to find something that does.
