Why we all deserve personalised interest rates


Gone are the days when insurance premiums were decided by age, sex, vehicle type or basic information. Today, financial services like short- and long-term insurance are personalised to reflect insurance risk based on how well clients drive or how well they take care of their health.

Offerings like Discovery’s motor and life insurance, are priced on a client’s personal risk profile and behaviour. In other words, what they do to protect good health and safety on the roads. This dynamic pricing based on behaviour is enabled through health- and driver-behaviour programmes, Vitality and Vitality Drive.

“Pricing insurance based on the behaviour of individual clients brought unprecedented innovation to the insurance industry. By helping people improve their health and driving behaviour, their risk decreases to generate insurance savings. These savings manifest in rewards and personalised premiums for clients – while having the societal benefits of healthier people and safer roads,” explains Akash Dowra, Head of client insights at Discovery Bank.

At Discovery Bank, the same model is applied with Vitality Money to guide clients on better financial behaviours. As these behaviours improve, so the rewards increase – one of them being Dynamic Interest Rates.

Why we should care about interest rates

Interest rates are a critical component of banking. They determine how much someone will repay on money that they borrow, and by how much the investments they make will grow. Traditionally, interest rates are set on an individual’s financial position when they first join a bank and are rarely updated over time. Discovery Bank is different.

“The aim is to do the same for finances as Vitality Drive does for driving and Vitality does for health and wellness. Our unique behavioural banking model with Vitality Money at the centre, rewards clients with better interest rates as they improve their financial behaviour. Dynamic Interest Rates apply to savings and borrowing rates and positive balances in accounts,” says Dowra.

Saving and good debt management are encouraged with Vitality Money. Depending on a client’s financial behaviour, they can pay up to 6% less on borrowing. And on Diamond Vitality Money status, a client can pay less than prime when borrowing, even on the Discovery Card account.

Clients also won’t experience any ‘lazy balances’ if they have settled outstanding amounts owed and have a positive balance in their transaction or Discovery Card accounts.

Dowra says Discovery Bank’s research shows there’s approximately R144 billion in ‘lazy balances’ sitting in accounts on which South Africans earn no interest; losing about R7 billion every year. With Vitality Money, all positive balances in your accounts ‘work’ for you with up to 5.5% interest, depending on your Vitality Money status.

The Dynamic Interest Rate can be as high as 6.5% on Discovery Bank’s demand savings account, which adds to significant growth over time.

Apart from Dynamic Interest Rates, good financial behaviour also comes with lifestyle and travel rewards, and Discovery Miles, a unique rewards currency that monetises good financial behaviour.

“At the time, the move to adjust insurance premiums based on controllable behaviours was bold. In retrospect, it has shown us that it works to encourage good health and better driving. With personalised interest rates, we want to reward clients for good money management and so help improve the long-term financial health of more South Africans,” Dowra says.

Check how healthy your financial behaviour is with the Vitality Money status calculator. It takes a few minutes of your time to learn about your finances across the five behaviours that determine your financial health. Know how to change it and take control of your finances today – Discovery Bank can show you how.

The Vitality Money Calculator is for information only and does not constitute financial advice. Please consult your financial adviser before making any financial decisions.

Calculate   your personal income tax

The 2020 Budget Speech is over and done, and that means we have new income tax percentages for the year to come. No need to delve back into your high school math skills, Discovery Bank’s handy Personal Income Tax Calculator will help you calculate and compare your monthly income tax based on the latest available tax figures.

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