Xinja isn’t taking new savings account customers, where else can you look?
Xinja has closed its market-leading Stash savings account to new customers following the RBA rate cut, but you can still get up to 2.50% p.a. on your savings elsewhere.
In an unusual move, Xinja has today announced it will be closing its Stash savings account to new customers. The bank says it's in response to the latest RBA rate cut, which saw the official cash rate drop from 0.75% to just 0.50% on Tuesday, as well as quicker-than-expected deposit numbers.
After the RBA cuts the official cash rate, it's common to see savings account rates fall by the same amount. This is because lenders are pressured to drop their mortgage interest rates, so they need to make up for this elsewhere. The money that banks lose by lowering mortgage rates is made up by the money gained from reducing interest paid on deposits.
Xinja now has more than $350 million dollars in consumer deposits in its Stash accounts, after launching the savings account less than two months ago. Paying a market-leading interest rate of 2.25% p.a. on $350 million worth of customer deposits is sure to be expensive, and Xinja has yet to launch any lending products (like mortgages) to outweigh this.
As such, Xinja says that restricting the number of Stash accounts means it's able to maintain its 2.25% savings rate for existing account holders. This means no new Stash accounts can be opened, and even customers who have an existing Xinja bank account won't be able to add a Stash account until further notice.
"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 are holding our rate steady, at 2.25%, but hitting the pause button on customers opening Stash accounts," says Xinja Bank CEO Eric Wilson.
Xinja says when it does reopen its Stash account, it will be existing customers with a Xinja Bank Account who get first access.
Where else can consumers find a good savings rate?
Fellow digital bank 86 400 also offers a maximum variable rate of 2.25% p.a. on its Save account. However, unlike Xinja, which has no conditions to meet to earn the rate, you need to deposit $1,000 a month into your 86 400 Save or 86 400 Pay Account. You can withdraw the money throughout the month and still earn the bonus interest. 86 400 has kept its savings rate unchanged following the RBA's rate cut.
Commenting on Xinja's decision, 86 400 CEO Robert Bell told Finder: "We've focused on building a sustainable business from the start. We launched our Pay and Save accounts last September and quickly followed them up with mortgages less than two months later. This has ensured we can build a stable balance sheet and remain open during market fluctuations."
Elsewhere, consumers can earn 2.50% p.a. with Rabobank's High Interest Savings Account with no conditions to meet, but there's one catch. The rate is a honeymoon rate for the first four months only, then it drops down to the standard variable rate which is currently 1.05% p.a. Still, four months could be long enough for savers who are looking for somewhere safe to park their cash in the short term.
The Up Bank savings account also offers 2.25% p.a. when you make five or more purchases a month from the linked Up everyday account.
If you're not happy with your savings rate, compare savings accounts to find a better deal.