If you're new in Israel, or on your way here, the best advice I can give you is to forget all your assumptions about how banks work. There are certain paradigm shifts you need to make in order to understand the banking system here.
Paradigm Shift #1: FEES - Israeli banks think of themselves as service providers. Each service they provide has a fee attached to it. As an example, just as you pay for each can of peas you buy in a grocery store, so you pay for each transaction that occurs in your account. Transaction fees range from 1.35 NIS up to 2.90 NIS/transaction. Teller transactions cost more - from 5.50 NIS to 6.80 NIS.
There are fees for everything you do inside your account.
Once you've established a relationship with a banker (something Rifka highly recommends), you can negotiate these and other fees but you cannot eliminate them. There's no such thing as free checking in Israel. Kacha Ze.
Postscript: After this post was published, a few people mentioned that members of the Israeli teachers' union (and perhaps other unions) can get very significant reductions in bank fees.
Paradigm Shift #2: BRANCHES - The Bank of Israel is the government's regulatory bank. Beneath them are five main banking groups - Bank Leumi, Discount Bank, First International Bank, Bank HaPoalim and Mizrachi-Tefachot. There are some private banks that operate outside this system, but these are the major players.
You have to think of each branch operating like an independent franchise. Most transactions cannot be handled at another branch of the same banking group. When you establish your account at one particular branch, that becomes your bank. Bank branches are not interchangeable in Israel. Kacha Ze.
Paradigm Shift #3: PASSING CHECKS - In Israel, third-party checks are a kind of black market currency. Let's say you wrote a check for 500 NIS to the woman who runs the local preschool. Even if you made the check out to her specifically, she can use that check just like cash to buy groceries. And the owner of the grocery can use it to pay his mechanic. And so on. Your original check can be used like cash, circulating all over Israel for up to 6 months, before anyone actually attempts to cash or deposit it. Kacha Ze.
There are ways to avoid this happening to your check. You can get your checks pre-printed with two parallel black lines (called "cross") and the words l'mutav bilvad inside. This is a signal to the bank that the check cannot be transferred to a third party (or a 4th or a 12th).
You can draw the lines and write l'mutav bilvad on your checks. But the best protection is to have the cross and l'mutav bilvad printed on your checks from the very beginning.
Paradigm Shift #4: ACCOUNT STRUCTURE - In Israel, each account has different sub-accounts. So you have one main account which might include sub-accounts for savings, checking, investments, etc. This one is not so hard to accept, but it is important to understand if you come from the US where each account has its own account number.
Paradigm Shift #5: KNOW YOUR BANKER - Bankers in Israel have a lot of discretion and it's important to have a good working relationship with one. Unless you're fluent in Hebrew, find an English speaking banker and make sure he or she knows you. Your banker can make a lot of things happen to your benefit - letting a check through when you have insufficient funds, raising your credit/debit card limit, extending overdraft, reducing fees, etc. Israel is the Middle East. Knowing your banker is your protexia (Israeli protection) for getting anything even slightly out-of-the-ordinary done at the bank. The good news is that decisions are not made by some anonymous bureaucrat who doesn't know you, but by a banker in your local branch who actually does.
Paradigm Shift #6: CREDIT RATING - There is no national credit rating system in Israel. But your bank is keeping tabs on you, assessing your banking behavior and your general responsibility with handling your account. You'll be assigned an internal rating according to the bank's algorithm (which you'll never officially know about). Kacha Ze.
Paradigm Shift #7: CREDIT CARDS ARE REALLY DEBIT CARDS - You have a monthly credit limit and you can charge up to that limit. At the end of the billing period, the entire balance is deducted from your account. There is no such thing as making a minimum payment and thereby accumulating credit card debt.
Further, if you're really new in Israel and have no financial resources to speak of, you might be issued a direct card, which means that each transaction will be debited from your account (with a fee for each one) as you incur them.
Kacha Ze.
1. Contrary to the banking standards abroad, Israeli customers are levied fees at every action on the account. On average a household spends over 250 NIS a year on bank fees alone. The amount varies based upon location, financial institution and methods of interaction with the bank. It is widely speculated that high fees inhibits consumer spending activity.
2. 71% of credit extended by financial institutions are provided to less than 1% of the borrowers. This means that a vast majority of money available to lend is being given to a very small percentage of those in need. While not an epidemic, households have found it difficult to receive loans in every area except for overdraft availability. Small Businesses are hit the hardest, even those that are established are unable to receive funding critical for operation and growth.
List of Banks in Israel
Banking in Israel more information
Most of the Israeli banking sector’s shortcomings can be traced to its duopoly structure and subsequent lack of competition. Those most effected by the situation are average banking customers who lack incentive to shop around and bargaining power.
2. High Interest Rates
3. Limited and Inconsistent Availability of Credit
http://www.umtbprivatebanking.com/services/banking-in-israel/
35 Yehuda Halevi Street
Tel Aviv 65546
Fax: +972 3 514 3341
Paradigm Shift #1: FEES - Israeli banks think of themselves as service providers. Each service they provide has a fee attached to it. As an example, just as you pay for each can of peas you buy in a grocery store, so you pay for each transaction that occurs in your account. Transaction fees range from 1.35 NIS up to 2.90 NIS/transaction. Teller transactions cost more - from 5.50 NIS to 6.80 NIS.
There are fees for everything you do inside your account.
Once you've established a relationship with a banker (something Rifka highly recommends), you can negotiate these and other fees but you cannot eliminate them. There's no such thing as free checking in Israel. Kacha Ze.
Postscript: After this post was published, a few people mentioned that members of the Israeli teachers' union (and perhaps other unions) can get very significant reductions in bank fees.
Paradigm Shift #2: BRANCHES - The Bank of Israel is the government's regulatory bank. Beneath them are five main banking groups - Bank Leumi, Discount Bank, First International Bank, Bank HaPoalim and Mizrachi-Tefachot. There are some private banks that operate outside this system, but these are the major players.
You have to think of each branch operating like an independent franchise. Most transactions cannot be handled at another branch of the same banking group. When you establish your account at one particular branch, that becomes your bank. Bank branches are not interchangeable in Israel. Kacha Ze.
Paradigm Shift #3: PASSING CHECKS - In Israel, third-party checks are a kind of black market currency. Let's say you wrote a check for 500 NIS to the woman who runs the local preschool. Even if you made the check out to her specifically, she can use that check just like cash to buy groceries. And the owner of the grocery can use it to pay his mechanic. And so on. Your original check can be used like cash, circulating all over Israel for up to 6 months, before anyone actually attempts to cash or deposit it. Kacha Ze.
There are ways to avoid this happening to your check. You can get your checks pre-printed with two parallel black lines (called "cross") and the words l'mutav bilvad inside. This is a signal to the bank that the check cannot be transferred to a third party (or a 4th or a 12th).
You can draw the lines and write l'mutav bilvad on your checks. But the best protection is to have the cross and l'mutav bilvad printed on your checks from the very beginning.
Paradigm Shift #4: ACCOUNT STRUCTURE - In Israel, each account has different sub-accounts. So you have one main account which might include sub-accounts for savings, checking, investments, etc. This one is not so hard to accept, but it is important to understand if you come from the US where each account has its own account number.
Paradigm Shift #5: KNOW YOUR BANKER - Bankers in Israel have a lot of discretion and it's important to have a good working relationship with one. Unless you're fluent in Hebrew, find an English speaking banker and make sure he or she knows you. Your banker can make a lot of things happen to your benefit - letting a check through when you have insufficient funds, raising your credit/debit card limit, extending overdraft, reducing fees, etc. Israel is the Middle East. Knowing your banker is your protexia (Israeli protection) for getting anything even slightly out-of-the-ordinary done at the bank. The good news is that decisions are not made by some anonymous bureaucrat who doesn't know you, but by a banker in your local branch who actually does.
Paradigm Shift #6: CREDIT RATING - There is no national credit rating system in Israel. But your bank is keeping tabs on you, assessing your banking behavior and your general responsibility with handling your account. You'll be assigned an internal rating according to the bank's algorithm (which you'll never officially know about). Kacha Ze.
Paradigm Shift #7: CREDIT CARDS ARE REALLY DEBIT CARDS - You have a monthly credit limit and you can charge up to that limit. At the end of the billing period, the entire balance is deducted from your account. There is no such thing as making a minimum payment and thereby accumulating credit card debt.
Further, if you're really new in Israel and have no financial resources to speak of, you might be issued a direct card, which means that each transaction will be debited from your account (with a fee for each one) as you incur them.
Kacha Ze.
1. Contrary to the banking standards abroad, Israeli customers are levied fees at every action on the account. On average a household spends over 250 NIS a year on bank fees alone. The amount varies based upon location, financial institution and methods of interaction with the bank. It is widely speculated that high fees inhibits consumer spending activity.
2. 71% of credit extended by financial institutions are provided to less than 1% of the borrowers. This means that a vast majority of money available to lend is being given to a very small percentage of those in need. While not an epidemic, households have found it difficult to receive loans in every area except for overdraft availability. Small Businesses are hit the hardest, even those that are established are unable to receive funding critical for operation and growth.
List of Banks in Israel
Banking in Israel more information
Credit Unions are member owned, non-profit financial insitutions that provide banking services while alleviating these issues.
Banking In Israel Today
The Israeli banking system is a tightly controlled, highly regulated, duopoly between the two largest banks in Israel, Bank Hapoalim and Bank Leumi.Most of the Israeli banking sector’s shortcomings can be traced to its duopoly structure and subsequent lack of competition. Those most effected by the situation are average banking customers who lack incentive to shop around and bargaining power.
What are the problems?
1. Excessive Account Fees2. High Interest Rates
3. Limited and Inconsistent Availability of Credit
Open A Bank Account In Israel
Banking in Israel and indeed opening a bank account in is relatively straightforward with Mizrahi Tefahot Bank.
Subject to your account application criteria and identification requirements being met (Your passport or visa will be required) we can have an account open within a few days.
Subject to your account application criteria and identification requirements being met (Your passport or visa will be required) we can have an account open within a few days.
Private Banking Centers in Israel
Leumi Private Banking Division35 Yehuda Halevi Street
Tel Aviv 65546
Fax: +972 3 514 3341
E-mail: private@bll.co.il
| Private Banking Centers | |
|---|---|
| International Clients | Domestic Clients |
| Tel Aviv Dizengoff Top Tower Bank Branch Number: 718 55 Dizengoff St.,17th Floor Tel Aviv 64332 Tel: +972 3 621 7333 Fax: +972 3 621 7355 French, German |
Tel Aviv Millenium Building Bank Branch Number: 686 17 Ha'arba St., 16th Floor Tel Aviv 64739 Tel: +972 3 623 3333 Fax: +972 3 623 7355 |
| Tel Aviv Dizengoff Top Tower Bank Branch Number: 606 55 Dizengoff St., 23 rd Floor Tel Aviv 64332 Tel: +972 3 621 7444 Fax: +972 3 621 7455/6 English, Spanish and Russian |
Jerusalem Bank Branch Number: 687 19 King David St. Jerusalem 94101 Tel: +972 2 620 1877 Fax: +972 2 620 1878 |
| Jerusalem Bank Branch Number: 780 19 King David St. Jerusalem 94101 Tel: +972 2 620 1811 Fax: +972 2 624 0431 |
HaSharon Bank Branch Number: 688 85 Medinat Hayehudim St. Building G, 11th Floor Herzelyia Pituach 46766 Tel: +972 9 960 9311 Fax: +972 9 960 9322 |
| Haifa Dan Panorama Hotel Bank Branch Number: 685 107 HaNassi Ave. Haifa 34632 Tel: +972 4 835 0333 Fax: +972 4 835 0350 | |
