Hundreds of Thousands Overpay Bank Fees in Israel, New Rules Aim to Cut Costs

A recent Bank of Israel report reveals that the average monthly cost for managing a checking account and debit card rose 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. However, the most significant fees now come from securities trading, which account for 33% of banks’ commission income from households, surpassing checking account fees at 20%. Smaller investment portfolios (25,000-50,000 shekels) face management fees up to 0.49%, nearly double the rates for larger portfolios.

A major disparity exists between customers on fixed-fee plans and those paying per transaction. The extended fee plan, covering up to 50 direct and 10 teller transactions, costs 20-30 shekels monthly. Customers performing the same number of transactions without this plan can pay up to 98 shekels, sometimes three to four times more, potentially costing hundreds of shekels annually. Yet, the plan is not always beneficial for low-activity customers, who may pay less without it. Switching to digital transactions can reduce costs by about 70% compared to teller services, but about 25% of accounts still pay over 10 shekels monthly without using such plans.

Upcoming reforms starting October will cap debit card fees at seven shekels and eliminate several charges. By July 2027, a unified account management service will limit fees to a maximum of ten shekels for up to 100 monthly transactions. Consumers are advised to review their transaction volumes and monthly fees to optimize their banking costs.