BoI: Competition among banks helps households get discounts

Bank Yahav the cheapest; among big banks, Hapoalim lowest, FIBI highest.

June 28, 2010 23:39
3 minute read.
Bank of Israel Governor Stanley Fischer

stanley fischer 311. (photo credit: Courtesy)

Household customers are getting discounts for service charges on their checking accounts as competition between banks over prices intensifies, the Bank of Israel said in a report Monday.

“There is more awareness among customers regarding bank-fee charges that are boosting competition among the banks for winning current and new household customers,” the biannual report on household bank fees said.

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“The banks are offering existing and new customers a full or partial exemption from fees in various marketing campaigns, while specific population groups such as students and soldiers are granted discounts benefits. As a result, there is a difference between the regular fee tariff advertised and the actual fee charged.”

Households paid an average of NIS 15.6 in monthly fees for checking account transactions including credit frameworks in the first quarter of 2010, compared with an average of NIS 16.3 one and a half years ago, a decrease of 8.5 percent in nominal terms, the report said. At the three largest banks, which serve 80% of household banking customers, average monthly fees on checking accounts including credit frameworks were NIS 15.

The survey examined the five largest banks’ household common banking fees for the first quarter of 2010. Bank Hapoalim was the cheapest, with average monthly fees of NIS 14.7 on checking accounts including credit-card frameworks. First International Bank of Israel was the most expensive, with average monthly fees of NIS 21.9, the report said.

The average monthly charge on checking-account fees at Bank Leumi and Israel Discount Bank was NIS 15 and NIS 17.5 at Bank Mizrahi Tefahot.

Bank Yahav was the cheapest bank by far for average monthly checkingaccount fees, at NIS 2.8.

Credit-card maintenance fees charged by Visa Cal, which is issued by Israel Discount Bank and FIBI, were the most expensive among the local card issuers and international card issuers.

The cheapest credit-card fees, whether for local, international or Gold cards, were charged by Isracard, which is issued by Bank Hapoalim.

“Since the beginning of January 2009, average credit-card fees have dropped by 11% in real terms,” the report said.

The average monthly maintenance fees for Isracard, which has 40% of the market, were NIS 4.2. Fees for Leumi Card, which has 29% of the market, were NIS 8.7. Fees for Visa Cal, which has 31% of the market, were NIS 10.6.

The Bank of Israel is calling upon bank customers to use its Web site for information to compare bank fees, to negotiate a reduction in fees for checking- account transactions or to make a choice about the most suitable bank.

Bank customers were getting an average discount of 46% for teller-based services and an average discount of 23% on direct-banking services on the advertised tariffs as competition between banks over prices intensified, the report said.

Since the bank-fee reform was implemented in July 2008, the Israel Consumer Council, backed by a some cabinet ministers, has been trying to cancel basic fees on checking accounts on the grounds that the central bank’s measures support the interests of the banks at the cost of the consumer.

In February, a Knesset private members’ bill to cancel bank fees on checking accounts was unanimously rejected by the Ministerial Committee on Legislation. The bill proposes the cancellation of 13 bank fees, including those for cash withdrawals, printing transaction records, making deposits or transfers between accounts, self-service deposits, paying bills and standing orders.

The central bank argued that the cancellation of bank fees for basic services on checking accounts would lead to an increase in the interest rate on credit.

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