Israeli Credit Cards' "Cash Back" Offers Under Scrutiny for Low Returns

Credit cards offering "cash back" rewards have become increasingly popular in Israel, but a closer look reveals that the promised "free money" often comes with significant limitations. These cards, offered by major companies like Max, Cal, and Isracard, as well as banks, present consumers with a complex system of fine print, hidden fees, and restrictive accumulation caps.

Unlike in the United States, where cash back rates can reach up to 5%, Israeli consumers typically receive much smaller returns, ranging from 0.4% to 1% on general purchases and up to 1.5% at specific affiliated stores. For example, Cal Cash Back offers 1% back up to NIS 10,000 in the first year, dropping to 0.75% thereafter, with rewards issued as Buy Me vouchers rather than direct credit. Max provides a 1% return, doubling for foreign currency transactions, delivered as a digital gift card. Isracard Cash Back also offers 1% initially, decreasing to 0.75% from the second year, and is limited to purchases at select major retailers.

Credit card companies and banks promote these cards as savings tools. However, the actual cash back is often not credited to the user's bank account but is instead provided as a loaded card or a voucher, encouraging further spending. This system raises questions about whether the proliferation of these cards truly benefits consumers or primarily incentivizes them to make additional, sometimes unnecessary, purchases.