BoI: Bank fees down 13% since 2008

Bank Yahav offers lowest fees; First International Bank of Israel has the highest.

Money Shekels bills 521 (photo credit: Courtesy)
Money Shekels bills 521
(photo credit: Courtesy)
Household customers are paying 13 percent less on average for service charges on their checking accounts since the bank-fee reform was instituted in July 2008, the Bank of Israel said Monday. They also are paying 20% less on average for credit-card fees due to increased competition, the central bank said.
“As part of the reform, the number of bank fees were cut to one-third,” David Zaken, the incoming supervisor of banks, said Monday at a session of the Knesset Economics Committee. “Banks are luring new customers with fee discounts and exemptions in various marketing campaigns. We have recently initiated a campaign to raise public awareness on eased rules for changing from one bank to another, in an effort to encourage customers to compare available conditions.”
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The bank-fee reform reduced the number of fees from 198 to 72. Certain fees, such as for credit frameworks, were abolished, while some fees on checking-account transactions were raised.
The Bank of Israel survey presented at the committee meeting showed that among all banks, Bank Yahav was the cheapest by a “substantial margin” for monthly fees on checking-account services.
First International Bank of Israel was the most expensive.
Among the five largest banks, Bank Hapoalim was the cheapest.
Credit-card fees charged by Visa Cal, which is issued by Israel Discount Bank and FIBI, were the most expensive, and those charged by Isracard, issued by Bank Hapoalim, were the cheapest.
“Greater transparency on bank tariffs following the bank-fee reform may have increased customers’ awareness of fee differences, but there is still a long way to go to help strengthen the bargaining power of the customer,” Shlomi Dagan, an economist at the Israel Consumer Council, said Monday.
Household monthly spending for checking-account transactions including credit frameworks has decreased 13%, from NIS 16.24 in July 2008 to NIS 15.22 in the third quarter of 2010.
Bank Yahav’s average monthly fees on checking accounts, including credit frameworks, were the lowest in the banking sector, at NIS 3.12 for July through September. At Hapoalim and Bank Leumi, which serve 70% of household banking customers, the fees were the cheapest among the five largest banks, at NIS 14.52 and NIS 14.65, respectively, compared with NIS 20.11 at FIBI.
In reaction, FIBI said the central bank’s report had considered a limited number of fees, which represent a small number of bank-account management fees. It said other morecrucial fees, such as interest spreads on loans, overdrafts and deposits, had not been included in the comparison, saying it offered competitive charges. In addition, FIBI said it offered the cheapest deals for young people, soldiers, students and pensioners.
As part of the reform, bank tariffs, fees and commissions for checking accounts have become cheaper for customers who use direct-banking services, which were an average of NIS 1.69 per transaction in the third quarter of 2010. In practice, fees were 25% lower, at an average of NIS 1.26 per transaction, as bank customers negotiated, the report said.
Fees ranged from NIS 1.35 per transaction at Hapoalim to NIS 2.10 at FIBI.
Transactions via teller-assisted services, which are mainly used by the elderly and the poor, are more expensive.
Teller-assisted services at the five largest banks were charged at an average of NIS 6.10 per transaction before discount and at an average of NIS 3.31 after a discount of 46%. Following a negotiated reduction, teller-assisted service fees were highest at Hapoalim, at NIS 5.12, and cheapest at FIBI, at NIS 2.17.
The five largest banks offered a special monthly tariff for the management of checking account transactions for certain population groups such as young people, students, pensioners and soldiers, the report said. FIBI’s monthly fee of NIS 3.50 was the cheapest, while Bank Mizrahi’s was the most expensive, at NIS 8.40.
From the beginning of 2009, average monthly credit-card maintenance fees dropped 21.4%. The average monthly fees for Isracard, which has 39% of the market, were NIS 3.95. Fees for Leumi Card, which has 32% of the market, were NIS 7.11. Fees for Visa Cal, which has 29% of the market, were NIS 10.36.