Tzvi Szajnbrum
To ease the immigration and absorption process for Olim

Banking in Israel is very different from banking in other countries

Relationships with the Bank Manager and Bank Clerks

As a new oleh, you need to understand that your relationship with the manager and the clerks in a bank can influence everything from fees to your credit line.

Technology

The Israeli banking system is very modern. It uses all the up-to-date technology available including: ATM machines, internet, e-mail, faxes, etc. While all this technology is there to make “your life easier,” don’t get too excited. As with many things in Israel, there is no technology without some bureaucracy.

Unfortunately, each bank does things differently and the laws and practices change frequently. For the latest information you must approach each specific bank to find out the various services they offer and the costs of each one.

Credit Cards

A credit card is a very important instrument and very flexible. In today`s electronic society, it is very difficult to live without a credit card! It is very important to understand that in Israel all credit cards balance, are actually debited automatically from our checking account.

Whatever you purchase is automatically debited from your account at the billing date for your month’s purchase. Some credit cards give you the option to buy on “credit” which means that a certain amount from the total sum owed is debited from your checking account each month. The credit card company is not giving you this option out of the goodness of its heart—they charge you interest for this option and sometimes an additional charge as well.

This system operates very differently than the American system. In the US, you can miss a credit card payment with little or no penalty. However, in Israel, if you miss a payment, since the card is linked to your checking account, the credit card company can pull the money right out as it pleases if payment is not received.

Be aware that credit card fraud does exist in Israel. Always keep your credit card with you and never let anyone else use it. Never keep the PIN number together with the credit card.

While credit cards are insured for loss and theft, make sure that you are aware of the scope of the insurance for the specific credit card that you hold. Most of the time, you will find that the insurance given on your credit card is not 100%. It is also very important that you keep the contact information of what you have to do and to whom you have to report such a loss or theft in a safe place.

How Israeli Credit Cards Work

  • In Israel, credit is mainly granted from your bank and not from a credit card company, although there are a number of private credit card companies that offer you credit cards such as for Paz, SuperPharm, SuperSol, Rami Levi etc. Although you may be getting a discount on the items that you purchase with this card, it is important for you to be aware that they also charge a high annual fee for the maintenance of such cards—around 120 shekels annually (they will usually give you the per month cost to make it sound much less). However, unlike other countries where there are set fees, in Israel it is possible to negotiate your own specific credit card fee depending on how much money you spend using your card. The more you spend—the more likely the bank is to waive your fee!
  • The full balance on the credit card will be automatically withdrawn from your checking account on the date you choose (e.g., The first of the month, the 10th of the month or the 15th of the month, are the usual choices). You should pick the date most convenient for you based on when your monthly salary is deposited into your bank insuring that you don`t go into overdraft as you will have to pay interest on any “minus” (Your “minus” is the amount of money you have spent from your account over the actual amount of money that you have in your account at a specific time.)
  • You will receive a monthly statement in the mail from the credit card company for the purchases made the previous month. Most companies provide Internet access to your statements as well.
  • Your credit framework (how much credit you are entitled to) could be any shekel amount varying according to parameters such as your salary, bank savings, securities you give to the bank, etc.
  • Always keep track of your purchases. You would be surprised at the amount of mistakes made by credit card companies (or the supermarkets).

Checks – Stopping, Canceling, Bouncing

Although stopping a check or canceling a check is standard practice in many countries, in Israel, canceling or stopping a check is considered a breach of the law! (There are many laws involved here and we are only reviewing the general aspects of the subject.) And sometimes even a canceled check can be considered bounced as well! Remember that. For more legal information on such cases, ask a lawyer.

In America, we are so used to just cancelling a check if we do not want the vendor to receive the funds. But it is very different in Israel. Banks can even bounce or cancel a check for many reasons and not just for lack of funds. Other reasons include the wrong date, cross-outs and erasures, a discrepancy between the written numerical amount from the word amount, etc.

Please be advised that when a check bounces, you are charged a fee!! And this fee is not just a few shekels but many dozens shekels (this differs between banks).

In the past few years new laws have been passed to protect the general population and there is now a limit to how many checks you are allowed to bounce per month/year. If you bounce too many all your check writing privileges may be suspended along with other banking rights such as the right to hold a credit card. They will all be cancelled. Please check with your bank for its specific regulations.

Please refer to our Check Writing article for more detailed information on checking accounts.

Overdraft

In the Israeli banking system, it is possible to have a negative account balance (overdraft), but the interest that you pay for this “loan” is very high. And the more money you are in the “minus,”  (overdraft), the higher the interest rate gets. There is a law prohibiting depositors to have an overdraft which exceeded their “credit frame” established by the bank but we have a lot of flexibility in our banks.

The Prohibition Against Money Laundering

This is a new law in Israel. The main purpose of the law is to enable authorities to locate money originating from criminal activity. Below are some of the different aspects of this law:

  • Your account information can be transferred to the authorities.
  • The bank is not required to notify customers when sending such reports to the authorities.
  • This law contradicts the principle of privacy and bank confidentiality.
  • Banks are now required to receive a list of identifying particulars from customers.
  • Depending on the size of the transaction, the bank will automatically report large transactions to the Ministry of Justice.
  • Bank transfers of over 200,000 Shekels are always reported to the Israeli Central Bank.
  • “Unusual” or suspicious transactions are reported as well.

General Advice

  • Keep all of your bank statements. By law you are supposed to have them available for seven years. In the future, you may need them and it’s very expensive to obtain copies from the bank. Please note that new laws require banks to report more clearly to customers and you may be inundated with paper reports.
  • You can write a check in Hebrew or English and the date can be either from the Hebrew or the Gregorian calendar. Use the language you are most comfortable with.
  • Before planning to go to the bank, it’s advisable to check the working hours – they change and vary from branch to branch.
  • In Israel, a post-dated check may be deposited before the check date.
  • If the check bounces, the penalty is high (high fees).
  • You are entitled to read any document before signing it – Better to keep a copy for yourself.
  • Remember! Checks cost money, credit cards cost money, every “line” in your account cost money. Israeli banks make money on every transaction (e.g., deposits/withdrawals at the teller window, etc.) that you make and even on those they make without your knowledge.

Once you have an account in an Israeli bank – we hope you will always have a positive balance in it!

About the Author
Passionate about helping new immigrants, Tzvi Szajnbrum, Attorney at Law and Notary, founded the Voleh Organization, through which he and a team of volunteers provide “pro-bono” guidance to English speaking new immigrants, helping to ensure their successful integration into Israeli Society. As a former officer in the Israeli army, Tzvi is also able to help lead new immigrants in the right direction regarding the IDF. CEO of The Szajnbrum Group
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