Israelis Can Earn More on Savings by Shopping Around for Better Deposit Rates

Many Israelis keep their savings in fixed-term deposits at their existing bank, often missing out on higher interest rates available elsewhere. While convenience plays a role, banks profit from these deposits as a source of funding. Banks may offer better rates to attract or retain funds, especially for larger deposit amounts or clients with multiple banking services like salaries, credit cards, or mortgages. Despite the potential for significant gains, less than 1% of bank accounts in Israel switch banks annually.

Savers can secure higher returns by actively comparing offers and negotiating with their current bank or a competitor. Even a small difference in interest, such as 1% or 2%, can amount to thousands of shekels annually on substantial deposits. For example, a 2% difference on a NIS 500,000 deposit could yield an extra NIS 8,500 annually before taxes.

To maximize returns, individuals should first understand their current deposit terms, including maturity dates and interest types. They can then approach their bank for an improved offer, leveraging their deposit size and overall banking relationship. If the current bank doesn't meet expectations, obtaining a quote from a competitor provides a strong negotiating position, even if the checking account remains with the original bank.

Further strategies include splitting large sums into multiple smaller deposits with staggered maturity dates to balance access to funds with locked-in higher rates. Additionally, savers should consider money market funds, which offer competitive yields, potentially with different tax implications. Finally, setting reminders to review deposit terms before automatic renewal is crucial to avoid accepting lower rates and losing potential earnings.