Israelis Move Billions to Low-Interest Deposits, Prioritizing Access Over Yield
Translated & summarized from Ice by baba
Israeli citizens deposited billions into short-term accounts in September, prioritizing immediate access to funds over higher interest rates offered by options like money market funds. While 14 billion shekels went into low-yield deposits, including daily accounts with less than 1% interest, longer-term deposits offered rates up to 3.54%. Banks also showed significant variation in offered interest rates, with some offering as high as 6% for specific deposit types.
The story in 5 lines · by baba
- Israelis moved billions into short-term deposits in September, prioritizing access over higher interest rates.
- 14 billion shekels went into low-interest deposits, including daily accounts with an average rate of 0.67%.
- Money market funds, offering higher yields, attracted significantly less money than short-term deposits.
- Longer-term fixed-rate deposits attracted billions, with rates ranging from 2.63% to 3.54%.
- Banks offered varied interest rates, with One Zero providing up to 6% for certain new customers.
Israeli citizens continued to move substantial sums from checking accounts into deposit accounts in September, according to Bank of Israel data. However, a significant portion of these funds, approximately 14 billion shekels, went into very low-interest options, including weekly and daily deposits yielding an average annual interest rate of just 1.36%. This represents about 43% of all money transferred to deposits.
Daily deposits were particularly popular, attracting around 6.3 billion shekels despite offering an average annual interest rate of only 0.67%. This choice stands in contrast to money market funds, which offer expected annual interest rates of 3% to 3.25%. These funds attracted only about 4.6 billion shekels in growth, less than a third of the amount deposited in short-term accounts, indicating a preference for liquidity over higher returns.
Not all deposits, however, were low-yield. Approximately 8.6 billion shekels were placed in fixed-rate deposits for six months to a year, earning an average annual rate of 3.54%. Another 4.72 billion shekels were deposited for one to five years at a fixed rate, yielding an average of 3.16%, while deposits of one to six months at a fixed rate attracted 4.1 billion shekels with an average interest of 2.63%.
Significant differences in interest rates were also observed among banks. For one-year fixed-rate deposits, One Zero offered 6% for new customers up to 100,000 shekels, followed by Bank Jerusalem at 3.6%. In one-month variable-rate deposits, Bank Jerusalem led with a median rate of 2.75%, with One Zero close behind at 2.5%. For fixed-rate deposits between one and two years, Bank Yahav offered the highest rate at 3.8%, while Bank Massad offered 1.9% and Discount Bank offered 2.4%.
The data highlights a clear public preference for keeping money accessible, even at the cost of lower interest rates, especially in short-term and daily deposits, over the higher yields available in money market funds.
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