During the last month, the three leading banks – Bank Leumi, Bank Hapoalim and Israel Discount Bank have significantly raised the fees they collect from customers. Based on evaluations of the banking sector, the foreseen price hikes are expected to yield additional income from commissions in the amount of 320-380 million NIS per year.
Bank Hapoalim, for example, has raised its credit allocation fees on private accounts by doubling them, its securities transaction fee jumped 10% from 0.5% on the amount of the transaction to 1.55% and its transaction fee on buying and selling units in provident and mutual funds increased to 0.11%.
The financial background for these price hikes is recent credit facility reforms which increased the credit distress of households and prevented them from making withdrawals beyond their authorized credit line. Thus, the Bank of Israel’s regulations have significantly contributed to the banks’ revenues, at the customers’ expense.
I will now suggest a few practical ways by which customers can reduce their payment of fees:
Since there is a fee for setting a credit line along with a quarterly/annual fee for maintaining this credit line, it is imperative for the customer to arrange the lowest possible credit framework as the fee is proportional to the amount of the credit line.
Regarding the account management fee, it is recommended to choose a track enabling the payment of a fee per transaction rather than a fixed fee per month (which will be charged even though no transaction has been carried out), as we shouldn’t underestimate even the negligible of fees. Therefore, it is recommended to order a few checkbooks at the same time and to withdraw cash in larger amounts instead of a few smaller amounts, as each single transaction in the account will cost you a fee.
Moreover, managing your account through the internet is another cost saving technique. The banks’ policy is usually to encourage account management via internet rather than physical access to the branch. Therefore, they grant important reductions for using the virtual way.
It is worthwhile to hold your savings and investments in the same bank where you manage your account so that the bank will accordingly improve your conditions as your investments constitute the bank’s security for your credit framework.
Account terms and conditions are always open to negotiation and renegotiation and every customer should exercise this right.
An additional idea would be for the customers to get organized (similarly to employee organizations) causing the banks to propose fee reductions through tender offers between the different banks.
And a tip for conclusion – there is no need to hold more than one credit card which will lead to superfluous costs such as issuing, loss and renewal costs.
Your personal account should be managed as any other business should be and in doing so you will be able to minimize all costs and extraneous fees.