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(photo credit: Courtesy photo)
Eli Mizroch, head of marketing and strategic planning at Bank Hapoalim, answers readers' questions about the overdraft reform in the Israeli banking system.
Maurice Ostroff, Herzliya: Assuming that I have not arranged a credit limit - but I have a substantial pakam account and need to make an urgent payment amounting to say one tenth of the value of my pakam deposit, will the bank be obliged to bounce my cheque?
Mizroch: The Bank is obliged to ensure that you do not exceed your credit limit. If it is possible to sell a part of the pakam, then that is what we will do. If not, we will contact you to increase your credit limit or offer you a loan. For the next few months, if we cannot reach you, we are able to automatically issue you a temporary credit facility so that the cheque will not be returned.
Walter Katz, Herzlia: If one has pakam and/or US$ deposits, why can this not be considered as credit balances in the event of the current account going into overdraft, perhaps unintentionally?
Mizroch: The Bank of Israel prohibits accounts from being overdrawn. If a payment is presented to the bank which will overdraw the account, we will analyze your account to assess liquid balances which can be used against the payment. These include all the various kinds of deposits, both in local and foreign currencies.
Nicole Goldman: Even if I don't want an overdraft, and never intend to use it, Bank Hapoalim is charging me 2 shekels per month for the option of having one. How can I avoid paying this fee? Are all banks charging this fee? Why does Bank Hapoalim feel it can charge 2 shekels a month for a service that I have no interest in using?
Mizroch: All Israeli banks charge a fee for setting up a credit facility. The Hapoalim fee is the lowest on the market and will only be charged in the beginning of January 2007 on basic current account salary facilities. You may decide not to have a credit facility and not to pay the fee. Remember though, that some time during the next few months, should you present a payment that is not covered by the balances in your current account, we will not be able to honor them.
Maurice Ostroff, Herzliya: Is there a charge for establishing a credit limit, even if one does not use it?
Mizroch: The fees on credit facilities depend on the type of facility. For the basic current account salary limit, there is no charge during 2006. At the beginning of 2007 we will charge 2 NIS per month, regardless of the usage.
Nava Martinez: I have signed a document Bank Hapolim sent me so I am able to have a line of credit as usual. If after July 1st 2006, I write a check and my line of credit has not arrived to the limit, will the cheque bounce or the Bank will honor it against my credit line?
Mizroch: All payments presented to the bank that are within your credit limit will be honored.
Carmi Rayben: I have an overdraft limit at my bank now but I am not currently in overdraft. If I write a check that is short of funds now, will it automatically be covered by my present overdraft or do I need to visit the bank and set up something now?
Mizroch: So long as you are within your credit facility the cheque will be paid.
Sarit Freed: What happens if you decide you do not need a line of credit (i.e. refuse to pay for a service you don't need...2 NIS per month for nothingâ€¦ on top of regular fees!!!!!!) If I am careful not to bounce any cheques, what harm is there in not having a credit line? (keep in mind, I am originally from Canada and I am used to not having a line of credit.)
Mizroch: There is no harm in what you are suggesting. It is important however, to ensure that you keep sufficient balances in your account to cover all payments.
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