Over the past month, the country's 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 for the lenders.
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 are recent credit facility reforms, which increased the credit distress of households and prevented them from making withdrawals beyond their authorized credit lines. Thus, the Bank of Israel's regulations have significantly contributed to the bank's revenues, at the customers' expense.
I'd like to suggest a few practical ways by which customers can reduce the charges they pay at the banks.
Since there is a fee for setting a credit line along with a quarterly/annual fee for maintaining this credit line, it is imperative that the customer to arrange the lowest possible credit framework as the fee is proportional to the amount of the credit line.
Regarding account management fees, it is recommended that customers 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 even the most negligible of charges shouldn't be underestimated. 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 incur a fee.
Managing your account through the Internet is another cost saving technique. The banks' policies usually encourage account management via the Web rather than physical access at the branch. Therefore, they grant important reductions for doing things 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 improve your conditions since 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 organize (similar to employee organizations), which would cause the banks to propose fee reductions through tender offers between the different banks.
Finally, there is no need to hold more than one credit card as doing so leads to superfluous costs such as issuing, loss and renewal fees.
Bottom line - your personal account should be managed as should be any other business, and in doing so you will be able to minimize costs and extraneous charges.
The author is an adviser in information risk management at KPMG in Tel Aviv.
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