Israeli Credit Cards' "Cash Back" Offers Under Scrutiny

Credit cards offering "cash back" rewards have become increasingly popular in Israel, promising consumers "free money." However, a closer examination reveals a system laden with fine print, hidden fees, and restrictive accumulation caps, according to a recent report. Unlike in the United States, where cash back can reach up to 5%, Israeli consumers typically receive much smaller returns, ranging from 0.4% to 1.5% at most, and often with significant limitations.

Companies like Cal, Max, and Isracard, along with banks, are promoting these cards. For example, Cal Cash Back offers 1% back up to NIS 10,000 in purchases, dropping to 0.75% from the second year. This refund is issued as a "Buy Me" voucher, not a direct credit. Max provides a 1% refund, doubling accumulation for purchases abroad or in specific sectors, delivered as a digital gift card. Isracard Cash Back offers 1% initially, decreasing to 0.75% in the second year, and is restricted to purchases at select major retailers.

While credit card companies and banks market these features as savings, the report argues that the actual cash back is a small percentage of the purchase amount. Furthermore, the rewards are not returned to the consumer's bank account but are provided as loaded cards or gift vouchers, encouraging further spending. The article questions whether the proliferation of these cards truly benefits consumers or merely incentivizes unnecessary purchases.