Banking in Israel - Banking in the World

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Banking in Israel

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List of Bank in Israel and SWIFT codes of Israel Banks can be found at: http://listofbanksin.com/ListofBanksinIsrael.htmBank opening hours times

Opening hours vary according to individual banks and, to a certain extent, from branch to branch. The standard bank opening hours are:
- 8.30am to 12.30pm (Sunday to Friday)
- 4pm to 5pm (Monday and Thursday afternoons).

Banking services in Israel

Most of the major banks have branches all over the country, but bear in mind that smaller, local branches may have restricted opening hours and services.

Most banks in Israel offer both telephone and internet banking, and also internet-only banking, with most of these services available in English. Most banks will provide bank statements and other related paperwork in English. You are required by law to keep bank statements for a period of seven years.

Overdrafts are generally made available to account holders, although they need to be arranged in advance with the bank and may attract a charge. It is advisable to check interest rates and charges before setting up an overdraft facility.

Many Israeli banks have dedicated foreign currency exchange counters. You can also use local money exchange services, which are typically located in the main shopping areas of larger towns and cities.

The main types of bank account in Israel

Israeli banks offer a wide variety of accounts, including current accounts, savings accounts and fixed-term accounts.

  • Current accounts, as in the UK, are typically used for everyday banking needs, but offering low interest rates.

  • Savings accounts will offer more competitive interest rates, with higher rates of interest being offered to longer-term accounts with restricted short-term access to funds. Interest rates may be variable or fixed.

  • Fixed-term accounts offer a defined rate of interest for a fixed term – typically ranging from a month to several years. Fixed-term accounts may offer little or no access to funds until the account matures. When the account matures (i.e., the fixed period expires), customers have the option to re-invest the capital and the interest earned.


Most banks also provide these accounts in a range of major currencies, including £ GBP (pounds sterling) and $ US (US dollars). It is worth assessing whether a foreign currency account will be useful for meeting everyday banking needs, such as making regular transactions in shekels for services such as utilities.

Opening a bank account in Israel

Opening a bank account in Israel is relatively straightforward, subject to meeting the application criteria and providing the required identification documents, such as a passport. Taking recent bank statements and a letter of reference from your current bank can also help with the application process.

Once your account has been opened, it is advisable to meet the bank manager, especially if you’re likely to need assistance or flexibility with important transactions such as major money transfers. There are strict rules about banking in Israel, but bank managers have a range of discretionary powers, and should be able to help with your banking requirements.

If you need to change banks, the competition between banks to attract new customers is high, so there are often a range of incentives and deals for new customers. Although the fees for moving accounts are typically small, there may be a significant amount of paperwork involved.

Opening a bank account before you arrive in Israel

Alternatively, opening an international account will give you access to a wide range of international banking services to help you manage your finances in Israel. In addition to offering tax efficient offshore banking and offshore savings options, you have the added flexibility of banking in a choice of major currencies.

International accounts can be used by clients living or working in Israel, and when travelling between international locations.

Credit card facilities in Israel

Credit cards (Visa and MasterCard) are widely used and accepted in Israel, and credit cards can be used to withdraw cash from ATMs. However, cash withdrawals are likely to incur a fee.

There are two main types of credit card in Israel:

  • Credit cards that can be used for transactions in Israel using local currency only.

  • Credit cards that can be used worldwide, in foreign currencies.


Typically, banks will only issue a new customer with a credit card after they have been resident and/or employed for at least three months, or if they have deposited significant amounts in their account. As with other banking services, bank managers have a considerable amount of discretion to judge each case on its merits.

I
t is expected that credit card balances will be paid off in full at the beginning of the following month.

Using cheques in Israel


Cheques are widely used in Israel, with banks allowing customers to post-date cheques for up to 12 months in advance and even deposit post-dated cheques. When the cheque payment is due, the bank will automatically process it and credit your account.

Bouncing more than 10 cheques in a month will lead to suspension of the account and all future banking privileges at any bank in Israel for a year. Doing this three times in a 12-month period leads to complete loss of banking privileges at any bank for five years.

When you have issued a cheque, you are able to stop it being processed if necessary. However, it is your responsibility to ensure you have sufficient funds in your account to honour any cheques that you issue.

Cash machines in Israel


Automatic teller machines (ATMs) are widespread, with cash withdrawals available 24 hours a day by using an ATM card (zero or low charge) or credit cards (higher charge). The majority of ATMs are located outside bank branches, and you can typically withdraw up to ₪1,000 ILS (shekels) a day – approximately £170 GBP (pounds sterling).

Money transfers to and from Israel

Money transfers conducted through Israeli banks are generally quick and efficient, and you also have the option of using one of the specialist money transfer businesses. It is worth comparing charges and rates beforehand to ensure you secure the best deal.

To help combat money laundering, Israel introduced limits in 2002 to money being brought into and taken out of the country. For the purpose of reporting, “money” refers to cash, bank cheques and travellers’ cheques.
1.If you are entering or leaving Israel, money in excess of 80,000 ILS (approximately £13,700 GBP) must be reported to Customs.
2.If you are a new immigrant first entering Israel, money in excess of 1,000,000 ILS (approximately £171,000 GBP) must be reported to Customs.

Bank charges

Overall, charges are high compared to UK banks. However, charges for individual services vary considerably, so consider your likely day-to-day banking requirements before you open an account and choose an account that gives you the most benefit for the least cost.

For instance, many people in Israel value having an account that has relatively low interest for overdrafts. However, if you’re likely to keep your account in credit, it’s worth considering an account that charges relatively high interest for overdrafts but offsets this with lower charges or higher interest for positive balances.

There are fees for almost all services, from cheque books and credit cards to using cash machines, or even any transaction involving a teller. It may be possible to negotiate fee levels with your bank for specific services or products, so again it is advisable to develop a positive relationship with your bank and maintain your finances responsibly.

Banking in Israel – other information


Israeli ombudsman


If you have any complaints or issues with a bank in Israel, contact the Israeli State Comptroller, who by law acts as the banking ombudsman. You can find more details at http://www.mevaker.gov.il/serve/site/english/index.asp

Adapting to a new country includes adjusting to that country’s banking system. Since banking is a necessary and regular part of life, it is important to have an understanding of the Israeli banking system prior to Aliyah.
Banking in Israel is different to banking in other western countries. Although Israel is a democratic country that allows its citizens to freely conduct business, it is more bureaucratic and this leads to a number of practical differences, some of which are listed below. Please note that this list is not comprehensive, but rather a basic outline of some major issues to be aware of as well as some suggestions as to how to deal with them.
1. Banks in Israel are more curious about your transactions than in other western countries where banking secrecy and privacy are respected more. In addition, Israeli banks may request you provide them with your social security number if you are a U.S. citizen.
Israel for good reason needs to worry about its security. In a region where terrorism is always a threat, the funding of terrorist activities is always on Israel’s radar. If you are transferring large sums of money, it is not uncommon for a banker to ask you specifically what the purpose of your transaction is, and to decide whether or not the money is being used legitimately. Refusing to cooperate because you believe that the bank should respect your privacy can lead to the banks sending your money back overseas or refusing to process the transaction.
Israeli banks have also been pressured by the U.S. to keep records of any bank accounts held in Israel by U.S. citizens so that they can more easily identify tax evaders. Most Israeli banks now require U.S. citizens to complete an IRS W-9 or similar form, disclosing their social security number or tax ID number. The banks will know if you are a U.S. citizen from your Teudat Zehut (identity card) which identifies where you were born. If you are U.S. citizen that was born in a country other than the U.S., the bank may not make these demands of you for lack of knowledge.
This is a complicated topic of its own but due to U.S. regulations known as FBAR and 5471 reporting requirements, a U.S. citizen who directly or indirectly maintains a bank account in any country outside the U.S. or who owns an interest in a foreign corporation, is required to make an FBAR and/or 5471 filing to the IRS/Treasury Department or face a penalty of $10,000. Limitations apply if the bank account is under a certain threshold and an accountant or attorney should be consulted.
2. There are bank fees for everything.
Banks charge fees for almost every transaction made. Some fees to expect include:
standard withdrawal fees
fees for depositing foreign currencies
transfer fees
wire fees
maintenance fees
additional cash withdrawal fees
check fees
You name it, the banks charge for it! It is something that you need to get used to as a day-to-day reality. Fees for cash withdrawals are usually larger after a certain threshold is reached and if you can plan ahead and withdraw cash in smaller increments you can avoid paying higher fees. In addition, when an Oleh or any newcomer opens an account, the bank generally waives or minimizes many of the fees for a specified period of time, but eventually when the grace period expires the fees are re-instituted. It is possible to ask your banker to lower your fees which they usually do for businesses, but this is done on request only and is not a given. It is a good idea to know your banker, so that you can negotiate fees and other situations that may arise down the road.
3. The credit card myth and other credit card facts to be aware of.
a. Credit Cards in Israel are Really Debit Cards
Credit cards are a standard part of financial life however, as an Oleh, you need to be aware that most credit cards issued in Israel are really debit cards. The debit will occur once a month and you can select the date that is most convenient for you from a list of several available debit dates. Generally, credit cards are issued by Israeli banks and the full outstanding balance will be automatically withdrawn/debited from your checking account once every month.
b. Expect a Low Credit Limit Initially
The actual credit that you will be granted initially may be much lower in comparison to the credit you may be used to in your country of origin. Should you need more credit at any point, over and above what may have been given to you, the merchant who you are conducting business with can call your bank’s credit card department for special permission to allow the transaction. In these cases, the bank will often agree to let the charge go through. Overdraft protection is available but must be requested from your bank.
c. Tashlumim (Payments)
A method of credit common in Israel is Tashlumim. Almost all merchants will give you the option of paying a bill over the course of several months (up to 24 months in some cases) interest free through your bank-issued credit card. A small fee may be charged by your bank for this service. Paying in Tashlumim, however, can use up your available credit which can mean that any future purchases which take you over the credit limit, will have to first be approved by the credit card company as discussed above.
d. Contesting Credit Card Charges and Advantages of Foreign Issued Credit Cards
Unlike in the U.S., unless someone charged your credit card without your authorization, it is virtually impossible to contest a credit card charge in Israel. It is advisable therefore, to not get rid of your foreign issued credit card that fast. A foreign issued MasterCard and Visa card (and sometimes American Express credit cards) are accepted in Israel by virtually all merchants.
The advantages of using a foreign issued credit card are that they offer you the true credit you are used to and more importantly, they allow you to contest charges made if a merchant does not supply you what was promised. The disadvantages are that foreign issued credit cannot be used to make a payment in Tashlumim and additionally, given that the currency used in Israel is Shekels your credit card company will need to convert the funds to pay your merchant.
Although the foreign exchange conversion rates offered by credit card companies are often very competitive and fair, most credit card companies will charge between 3-5% for the currency conversion, causing you to end up with a poor exchange rate. A suggested solution to this is that you bring to Israel a foreign issued credit card that waives or minimizes all foreign exchange transaction fees. A search on the internet can lead you in the right direction but at the time of writing this article, Capital One offers a credit card that charges customers no fees for foreign transactions.
4. Bouncing or putting a stop payment on an Israeli check   and negotiating an Israeli check.
Bouncing a check in Israel has more serious ramifications than in other western countries and is really bad for your credit. At worst, it could be deemed a criminal offense and there is an expedited process available to sue someone who has bounced a check they have given you. Also, you can generally only put a stop payment on a check if you have the funds to cover it should it be cashed.
It is common and legal in Israel for Party B who has received a check from Party A to endorse the check to Party C. If so endorsed, Party C can sue the original check writer (Party A) if the check is stopped, even though Parties A and C have nothing to do with each other. In order to avoid such incidents, the following words “to the payee only not negotiable” as well as 2 parallel diagonal lines should be added to the check near the name of the recipient.
Checks written in English in Israel are perfectly valid.
5. Ikulim (bank account restraining orders).
In Israel the enforcement and collection of unpaid municipal bills is slightly more aggressive than in the U.S. Should one fail to pay municipal or government related bills such as property taxes, parking tickets, Bituach Leumi etc. a creditor has the right to place an Ikul (restraining order) on your account. In such an event, your bank account can be frozen to the extent of the sum due to the creditor. An Ikul on your account can be placed without advance notice from the court, although you most likely would have received several demands from the creditor that you may have ignored or failed to understand. The creditor will have resorted to the Ikul as a final measure. Many Olim are surprised or shocked by this process because they are accustomed to a fair hearing prior to the taking of such action.
Olim need to understand the importance of not ignoring municipal bills. Most municipalities in Israel are very accommodating if you speak to them in advance before an Ikul had been issued. They are eager to work out payment plans and may even agree to settle the bill for a lower amount.
6. Sending money overseas from Israel can be difficult .  Don’t close your foreign bank account.
a. International Transfers
Although it is much easier nowadays to send money overseas from Israel than it used to be, it is still difficult and generally a lengthy and time consuming process. An affidavit which states that you don’t owe any taxes on the monies being sent overseas must be completed and submitted to your bank before they will honor your request,. You may also be required to obtain a document from the tax authorities proving that you don't owe tax on the money leaving the country.
One of the most common events is someone sending the proceeds of a property sale out of the country. In this case the lawyer will be able to provide the seller with a document called an Ishur Mas Shevach (proof of capital gains tax). The bank may require you to provide them with this document prior to sending your money out of the country. Every situation is different so consult your bank to find out what documents are required before sending the money.
On a side note, in Israel you can deposit foreign currencies in your account without converting them to Shekels (which is helpful in avoiding foreign exchange risk) however, there are significant deposit and withdrawal fees when doing so and an affidavit will be required to send foreign currencies overseas as mentioned above.
Suggestion: Maintain your foreign bank account even after you make Aliyah and sign up for online banking. Also, before you leave to Israel make sure your foreign bank account is set up for sending out wires and ACH transfers so that you will easily have access to your money. Make sure to also bring your foreign checkbook with you. Due to the difficulty in sending foreign currencies overseas it is suggested to keep your foreign currencies on deposit overseas and send the money to Israel when you need it.
Also, if your U.S. dollars remain overseas you will not have to be overly concerned with the FBAR filing requirement (see above) since you are keeping your U.S. dollars on deposit in the U.S. and not in Israel. Receiving overseas foreign money in Israel is much easier to do but may take several days to appear on deposit in your bank account. To receive transfers from overseas an IBAN (International Bank Account Number) or Mispar Zahav as it is known in Israel must be used to identify your Israeli account.
b. Domestic Transfers
Transferring money in Israel from one Israeli bank account to another is quite simple, especially if they are standard transfers, and can be done online or with a teller at the bank. Of course if you need to transfer large sums of money between accounts in Israel your bank may ask for more information (as discussed above).
Bank account identification codes/numbers are relatively simple in Israel. Each bank in Israel is assigned a 1 to 2 digit number. Each branch of a specific bank is assigned a 3 digit number and each account is designated a 5-7 digit number (although some account numbers may be longer). When you transfer money within Israel, you just need to know these three sets of numbers along with the account holder’s name .Transfers are usually available the next business day however a special IBAN transfer (for an additional fee) may be utilized for same day delivery.
7. Foreign exchange  - w here is the best place to go to convert foreign currencies?
Most immigrants to Israel will have to exchange the currency of their country of origin to Shekels at some point. Where is the best place to do this? Banks, the post office and money changers all offer this service. Also a foreign issued credit card is also a good way to make purchases in Israel but beware of hefty foreign exchange fees charged by credit card companies (see above).
Aside from those located at airports or in tourist areas, money changers generally offer the best exchange rates and turnaround times for foreign exchange in Israel. It is important to shop around though since competition is fierce. It is also crucial to make sure the money changer is licensed and reputable. It is suggested that you never keep money on deposit with a money changer since most money changers are not insured and there have been cases of people who lost their life savings. Only a licensed and reputable money changer should be used to convert your currencies.
Money changers also provide you with the option of depositing or cashing foreign checks in Israel and converting your foreign currency to Shekels. Banks also offer this service however it generally takes weeks for a bank to cash a foreign check. The downside of cashing a foreign check is that the money changer charges a check cashing fee of 1-1.5 % in addition to a foreign exchange rate fee. This can be avoided if you make sure you maintain your foreign bank account whilst in Israel and are set up for online banking, wire or quick-deposit transfers (note: The foregoing may be difficult to set up once you permanently move to Israel since you will no longer have a U.S. residence address. Banks generally do not like servicing residents of other countries notwithstanding the citizenship or dual citizenship of their customers, and may even close your foreign account if you do not maintain some sort of address in your country of origin).
Wiring or transferring monies to your money changer vs. cashing a check can save you money. Of course the wire fee must be assessed in proportion to the amount of money being wired, to ultimately decide if cashing a check is more worthwhile than sending a wire. For example, If you need to convert $20,000 to shekels it may justify paying a $50 wire fee because the wire fee comes out to 1/4 of one percent, but it comes out to 20% if your wire is only for $250 in which event a check is the way to go. Inquire from your money changer if they have a bank account in the same country where your bank account is located so that you can send them a domestic wire vs. an international one.
In summary it is important to plan ahead and know what to expect when moving to Israel. You can avoid unnecessary pitfalls when navigating the banking world in Israel if you are properly prepared.

 
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