Credit Cards in Israel (including what you need to know about Tashlumim)

This post was originally published in 2017. It's 4 years later, so I'm putting out an updated version.

Here's a QUICK primer about Israeli credit cards:

Israeli credit cards are not like American ones (sorry, I don't know how British/European cards work, yet). They are inherently attached to your bank account, so you'll see the charge for your card's balance deducted from your checking account AUTOMATICALLY on the due date. And not just a minimum fee - the entire balance will be deducted in most cases. You can set up certain cards - but not all - to deduct less than the full balance, however, your interest rates will be sky high and I do not recommend doing this if you can avoid it. 

Also, please note that in order to qualify for a credit card in this country, you'll need to meet your bank's requirements. And your first credit card will be from your bank. Only after you have established a credit card that is issued by the bank where you hold your checking account will you be able to apply for another type of card (such as the ones offered in supermarkets or other chain stores). Bank-issued cards tend to have low credit limits. The other cards can have much higher credit limits.

Note: your Israeli credit card is inherently tied to your Teudat Zehut (government-issued ID), and often you'll be asked to verify your Mispar Zehut (ID number) when you pay for something using your credit card. This is a fraud-prevention measure and is considered pretty standard.

When you whip out your credit card, you can often choose to charge your purchase "regular" or "tashlumim". 

What you need to know before you pay for something in "tashlumim" (installments) on your credit card:

So here's a quick rundown of what you need to know about these payment options:

Tashlumim [Installments] divide your total for a particular purchase into equal monthly installments. When you're at the checkout (in person or online) you may be asked "how many tashlumim?" You'll then choose how many installments you want if you're going this route. So, for example, if your bill is 2000nis, and you choose 10 tashlumim, you'll be paying 200nis for each of the next 10 months. 

Tashlumim are only available when you use a credit card that was issued in Israel, even if they ask you when you use a foreign card. They just aren't inspecting your card to see where it's from! Don't try it with your US card, the charge will not go through.

Tashlumim are interest free. But not every method of paying installments is "tashlumim"! Some stores offer "Credit" payments that come with a fee and interest (and it will be credit card interest, which is usually quite a high percentage)! Beware of paying utility bills in tashlumim - they are often "Credit" payments and not fee-free. Some stores also offer credit payments instead of tashlumim. Check carefully.

Be aware that tashlumim do not allow you to make a purchase larger than your credit line! Your credit line is set by the bank that issued your card - and you are not allowed to charge more than that amount on your credit card in any given month. Splitting a purchase into tashlumim does not mean that you can use next month's credit line too: Your credit line is SET,

Let's say your credit line is set at 10,000nis. You will be allowed to charge up to 10,000nis and NOT MORE on your credit card in a billing cycle. Then, when the money goes out of your checking account on a preset date (usually the 10th or 15th of the month), your credit line is cleared for more purchases. HOWEVER - if you split a purchase into Tashlumim, your credit line will be tied up. 

Here's how it works - you make a purchase for 5000nis, and choose to pay it in 5 tashlumim. Each installment is 1000nis. But 5000nis of your credit line gets locked away until the purchase is paid off in 5 months! It seems that the "locked amount" decreases with each payment you make, so one month later, you'll have paid off 1000 NIS but 4000 NIS will still be locked. So you won't be able to make another large purchase, if it means you'll exceed the 5000nis in credit line that you have left.

Sometimes paying in tashlumim make sense. Other times, it really doesn't. I recommend never paying in tashlumim for everyday purchases - rather, budget appropriately and make sure you're not spending more than you can afford on the everyday things. Once in a while, a large purchase comes up, and paying for it using a no-hassle, interest-free payment plan (what tashlumim are, in reality) can make life easier. It certainly beats taking out a 5000nis loan to cover an expense. Don't do it all the time, though. You'll find you've overspent really quickly. 

Tashlumim are not unique to Israel, by the way. They just get presented differently in other places (think of how many times you heard something would cost $X per month if you make 12 equal monthly payments - I'm guessing you've heard that - THAT, my friends, is "tashlumim" in a nutshell)! They are a way of making items FEEL more affordable, so be CAREFUL! I don't like it when you look at prices for items, say furniture, and the price is the monthly payment they assume you would make if you are paying in 12 tashlumim! I feel like people don't bother to do the math and check how much they are ACTUALLY paying because the monthly payment feels comfortable enough.

Don't fall for it - do the math! Make sure you know how much you're paying before you purchase. And ONLY use tashlumim if you are sure you can pay it off in a reasonable time frame and if this purchase warrants it.

Tip: Try to never have more than one purchase at a time on Tashlumim, and budget for it and make sure that there is enough money to cover the large expense over the next X number of months, in addition to your ongoing, regular expenses. And then WAIT before making another large purchase, until you've paid off the first one in full, and even longer, so you can build up some savings.

Feel free to comment below if you have questions about tashlumim, and I'll do my best to answer!

Tashlumim Explained

What you need to know before you pay for something in "tashlumim" (installments) on your credit card:

Welcome to Israel! It's great that you're here. I know life here can be confusing at times, so I'm going to try to help you decode everyday life a bit. Have you noticed how when you shop, you are often asked, "tashlumim?" as you hand over your credit card? Many new olim wonder what on earth this is. So here's a quick rundown of what you need to know:

Tashlumim - Installments - break whatever your total for this particular purchase is into equal monthly installments. You will be asked "how many tashlumim?" and you'll have to choose how many, if you are going this route. So if your bill is 2000nis, and you choose 10 tashlumim, you'll be paying 200nis for each of the next 10 months (as an example). Tashlumim are only available when you use a credit card that was issued in Israel, even if they ask you when you use a foreign card. They just aren't inspecting your card to see where it's from!

Tashlumim are usually interest free. But not always. They can be "Credit" payments that come with a fee and interest (and it will be credit card interest, which is usually quite a high percentage)! Beware of paying water or electric or other bills in tashlumim - they are often "Credit", as is the default at Ikea. Also, at self checkout in Shufersal, you may be given a "Credit" option! This is not regular tashlumim - it incurs fees and interest! Regular tashlumim do not incur a fee, since the BOI stepped in a few years ago and made them free. (That doesn't mean there are no consequences, though, so please read on...)

Tashlumim do not allow you to make a purchase larger than your credit line. Your credit line is set by your bank - and you are not allowed to charge more than that amount on your credit card. Splitting a purchase into tashlumim does not mean that you can use next month's credit line too: Your credit line is finite.

Let's say your credit line is set at 10,000nis. You will be allowed to charge up to 10,000nis and NOT MORE on your credit card in a billing cycle. Then, when the money goes out of your checking account on a preset date (usually the 10th or 15th of the month), your credit line is cleared for more purchases. HOWEVER - if you split a purchase into Tashlumim, your credit line will be tied up. 

Here's how it works - you make a purchase for 5000nis, and choose to pay it in 5 tashlumim. Each installment is 1000nis. But 5000nis of your credit line gets locked away until the purchase is paid off in 5 months! So you won't be able to make another large purchase, if it means you'll exceed the 5000nis in credit line that you have left.

Sometimes paying in tashlumim make sense. Other times, it really doesn't. I recommend never paying in tashlumim for every day purchases - rather, budget appropriately and make sure you're not spending more than you can afford on the every day things. Once in a while, a large purchase comes up, and paying for it using a no-hassle, interest free payment plan (what tashlumim are, in reality) can make life easier. It certainly beats taking out a 5000nis loan to cover an expense. Don't do it all the time, though. You'll find you've overspent really quickly. 

Tashlumim are not unique to Israel, by the way. They just get presented differently in other places (think of how many times you heard something would cost $X per month if you make 12 equal monthly payments - I'm guessing you've heard that - THAT, my friends, is "tashlumim" in a nutshell)! They are a way of making items FEEL more affordable, so be CAREFUL! I don't like it when you look at prices for items, say furniture, and the price is the monthly payment they assume you would make, if you are paying in 12 tashlumim! I feel like people don't bother to do the math and check how much they are ACTUALLY paying, because the monthly payment feels comfortable enough. 

Don't fall for it - do the math! Make sure you know how much you're paying before you purchase. And ONLY use tashlumim if you are sure you can pay it off in a reasonable time frame and if this purchase warrants it.

Tip: Try to never have more than one purchase at a time on Tashlumim, and budget for it and make sure that there is enough money to cover the large expense over the next X number of months, in additon to your ongoing, regular expenses. And then WAIT before making another large purchase, until you've paid off the first one in full, and even longer, so you can build up some savings.

Leave a comment if you have questions about tashlumim, and I'll do my best to answer!

Banking In Israel - my experiences

Banking in Israel seems to be one of the major things that confounds olim from Western countries. I get banking questions a LOT.

I've banked in Israel at several banks. I've used Bank Hapoalim, Bank Leumi, and Bank Yahav.

By far, the one I have paid the least to hold my money for me is Bank Yahav.

When we first returned to Israel in 2010, we had planned to open a Bank HaDoar account for our sal klitah money to go into. It seemed the most portable and inexpensive option, but I was tired and worn out and I let the merkaz klitah social worker tell me I was wrong. I listened to her and we opened a Bank Hapoalim account upon her insistence (makes me wonder if she was actually getting some sort of kickback from them, but I digress). Which turned into a BIG mistake, since we ended up being charged up and down with all manner of fees, despite being told we'd gotten special olim rates, and we could not change dollars efficiently if need be, and it was in a different city than we'd ended up living in, so it was a REAL pain in the neck.

We found out about Bank Yahav from our then-landlord, opened an account, and went through the half-day arduous, wrist-exhausting ("sign on this line" about a thousand times) process of closing our Bank Hapoalim account. If only I hadn't let the social worker convince me in my post-flight traumatic state that I didn't know what I was talking about! At least if we'd opened a Bank Hadoar account we would have been able to close the account at any post office in the country!

Moral of the story: don't let social workers convince you that all your hard work researching options was futile and THEY know best (and yes, by the way, I'm a social worker so I can complain about other social workers). Oh, and open a bank account at Bank Yahav. Free checking. Almost no fees. Very good service (at least we've had a decent experience with the Tiberias branch). 

The one major issue we've encountered is the Bank Yahav website has some technical problems for people using any browser other than IE. In our house, we use Firefox or Chrome, so we've had to learn how to read the banking menus backwards. I've spoken to a nice tech named Josh over at Bank Yahav, who told me the problem really belongs to Bank Hapoalim, since Yahav uses Hapoalim's internet banking interface. See - I told you to stay away from Bank Hapoalim!

But to tell you the truth, it's kind of useful to read Hebrew backwards. Or I will get my kid to make a patch for my computer so I don't have to. If he does, I'll try to get him to publish it somewhere so all of you can have it too!

Check out the list of branches to see where there's one near you! And switch and start to save money on banking!

(This post was not a sponsored post, but if you do go to open an account at Yahav, you are most certainly encouraged to mention my website when they ask who referred you! Thanks!)

Update: Bank Yahav has fixed the backwards Hebrew problem! I first saw this on motsaei shabbat of May 17. Not sure exactly when it was fixed, but it was such a nice surprise to see it back to normal again.