Why Israelis Are Keeping More Money in Their Wallets
The Bank of Israel is reporting that Israelis have been keeping more cash in their wallets in the last 18 months. Reports show that the average wallet, today, contains 340 shekels versus 260 shekels a little over a year and a half ago.
Growth in the amount of money in an Israeli’s wallet tells me a few things, which the report does point out, including that the growth of cash purchases is increasing. Consumers are not using debit and credit cards as quickly as they were in the past.
Why?
A major shift in ATMs has helped, and the rise in the number of available ATMs has allowed for easier access to cash. But, Israel is going to implement a ban on large cash purchases in January. The ban on paying in large sums of cash has a limit of 11,000 shekels or more. If a person is found to violate the ban, they may face up to a 30% fine.
Cash circulation volumes are shrinking, compared to years past, falling from an average growth of 11% in the past decade to just 8% in 2017.
Still, Israelis are keeping more cash on them because it’s simple and easy. There’s no need to swipe, and cash doesn’t come with service fees. Cash payments don’t require power, so they can be used in any circumstance. If an ATM is broken or a point of sale system is down, you can still pay.
But let’s look deeper into the issue to see why Israelis are carrying more shekels than in the past.
Small businesses are being boosted and promoted, and this is leading to higher wages and better employment options. Jewish Agency just announced that southern Israeli communities will have access to new loans. The new loan options will be low-interest loans for businesses that have been impacted by Gaza-based terrorists.
Minimum wage also rose over the past few years, entering the final stage in December 2017 when minimum wage rose to NIS 28.50 an hour, or NIS 5,300. The increase is from NIS 26.90 per hour, and the daily minimum rose from NIS 231 to NIS 245.
Israelis also have the issue of overspending their income by 156%. Household debt hit 42% of the country’s GDP in the second half of 2017. Credit card debt has risen by 4.13% and housing credit has increased by 4%.
No, this isn’t a good thing, but it may also factor into why more shekels are entering the pockets of Israelis.
Paying in shekels allows for lower fees at some stores, and this is a good thing for an Israeli that is spending more than it earns. Cash payments also don’t pose the same risk of identity theft as paying through a credit or debit card. It’s easier and faster to pay in cash than to swipe a card and face the risk of identity theft occurring.
Cash has been said to “be on the way out” in a lot of countries, and while people may prefer the ease of carrying credit and debit cards, rising fees and potential glitches make keeping shekels in your wallet a smart choice.
