Hundreds of Thousands Overpay Bank Fees in Israel, New Caps to Ease Costs

A recent Bank of Israel report reveals that the average monthly cost for managing a checking account and debit card has risen from 29.1 to 31.6 shekels, an 8.6% increase. This hike is partly due to the end of wartime fee reliefs and increased foreign currency transactions. Account management and information services average 11.7 shekels monthly, debit cards 12.6 shekels, and foreign currency transactions add 7.3 shekels.

Securities fees have become the largest source of bank fee income from households, accounting for 33% of total fee revenue, surpassing checking account fees at 20%, debit cards at 19%, credit fees at 13%, and foreign currency fees at 7%. Smaller investment portfolios (25,000-50,000 shekels) face management fees up to 0.49%, often double the rates charged to larger portfolios.

A significant disparity exists between customers on fixed fee plans and those paying per transaction. The extended fee plan, covering up to 50 direct transactions and 10 teller transactions, costs 20-30 shekels monthly. Customers performing the same number of transactions without such a plan can pay up to 98 shekels, sometimes three to four times more, potentially costing hundreds of shekels extra annually. However, for low-activity customers, paying per transaction may be cheaper.

Switching to digital banking channels can reduce costs by about 70% compared to teller transactions. Yet, about 25% of accounts still do not use fee plans and pay over 10 shekels monthly, despite potential savings from simple bank inquiries.

Upcoming reforms starting October will cap debit card fees at seven shekels and eliminate several fees. By July 2027, a unified account management service will limit fees to a maximum of 10 shekels for up to 100 monthly transactions, aiming to reduce the financial burden on consumers.