Opening a bank account in Israel is a crucial step for anyone establishing life in the country, whether as a new immigrant making Aliyah, an international student, or a foreign worker. The Israeli banking system combines cutting-edge technology with traditional financial practices, creating a unique landscape that requires careful navigation.
Israel boasts a highly developed banking system that excels in international financial transactions and offers a diverse array of financial services. However, understanding the requirements, choosing the right bank, and managing costs effectively requires comprehensive knowledge of how the system operates.
Understanding the Israeli Banking Landscape
The Israeli banking sector is characterized by rigorous regulatory oversight and competitive dynamics. Since 2016, Israel has enacted a new law governing financial services, which prioritizes safeguarding the rights of financial organization clients and ensuring compliance with antitrust regulations. This creates a secure but complex environment for banking customers.
The market is dominated by several major institutions, each offering distinct advantages and services. Recent developments have seen Israel’s two largest banks published financial statements this week showing both raking in record numbers of shekels, leading to regulatory pressure for better customer treatment and reduced fees.
Major Israeli Banks and Digital Options
Bank Hapoalim: The Market Leader Pioneering the banking industry since 1921, Bank Hapoalim stands as Israel’s most expansive financial institution. It prides itself on accessibility, highlighted by its array of ATMs and branches scattered across the nation. Also, it offers competitive fees and an exclusive discount for Olim, making it a prime choice for banking services.
Bank Leumi: Innovation and Tradition Similar in size to Bank Hapoalim, Bank Leumi currently offers a diverse selection of account types, including specialized accounts for employees. The bank also caters to the needs of tourists with its non-resident account option and simplifies the banking experience with the possibility of opening accounts online.
Israel Discount Bank: Focused Service As the third-largest bank in Israel, founded in 1935, Discount Bank has established a big presence. Its affiliate, Mercantile Bank, serves a wide array of clients, including youth, soldiers, and more. Notably, Discount Bank offers enticing incentives specifically designed for new Olim Chadashim.
Digital Banking Revolution: Pepper and One Zero
Pepper by Bank Leumi: Innovating within the realm of digital banking, Pepper was launched in 2017 as a forward-thinking branch of Bank Leumi. It revolutionizes banking with zero transaction fees, leveraging cutting-edge technology to provide personalized financial insights and account management solutions that cater directly to the user’s needs.
For the first time in Israel, youngsters will be able to open their first-ever bank account via mobile only. The Bank of Israel has authorized Pepper, Bank Leumi’s digital bank, to offer customers aged 16-18 to open their first-ever current account.
One Zero Bank: Introducing Israel’s inaugural digital or ‘neo’ bank, One Zero offers the ultimate financial management flexibility. Our proprietary smart technology scans your account every day, reviewing bank card debits, checking activity, and deposits every day. Our proactive messaging system will alert you as soon as we find anomalies or problems in your account, as well as opportunities for savings and growth.
Account Opening Requirements
For Israeli Citizens and New Immigrants (Olim) As an Oleh, it is required to gather various documents when preparing to open a new bank account:
- Your resident identification card (Teudat Zehut) and your Oleh certificate (Teudat Oleh), which confirms your migrant status as an Oleh
- For those from the US, your social security number will be required
- The “Note of Future Bank Account” received at the Israeli airport upon arrival. The bank will stamp this to assist with your future registration at the Ministry of Aliyah and Integration
- Initial funds in cash or a check to open the account
- If opening a joint account, come with your spouse, as both parties need to be present
For Non-Residents and Foreign Nationals Yes, you can open a bank account even if you aren’t an Israeli resident. Many Israeli banks offer “non-resident accounts” to people who live abroad. Your eligibility will depend on whether you meet the criteria the banks set, including the number of days spent in Israel per year.
Required documents include:
- Valid passport with Israeli visa or entry stamp
- Proof of foreign address
- Tax identification number for international compliance
- Many banks may impose a nominal fee for account opening, alongside an initial deposit requirement
Special Considerations for Students For a student account: Letter from yeshiva or institution stating that one is a student, the period of study, study hours and stipend is required for accessing special student rates and fee structures.
The Account Opening Process
Preparation and Timeline Choose the bank and branch you open your account in wisely. During your first few months of Aliyah you are likely to need to make several transactions at your bank, so it’s a good idea to choose one close to where your live or work. It is highly recommended that you go to the bank to open your account at least one hour before they close.
In-Person Process Be sure to come prepared: there’s a lot of paperwork, and many boxes need to be ticked if you’re a foreigner opening a bank account in Israel. The average time for the process is about forty minutes to two hours. It rarely takes any longer.
Digital Account Opening Available for Pepper Bank (Leumi) and One Zero Bank. Requires scanning ID & live video verification. Takes 1-3 days for approval. No need to visit a physical branch. However, Due to regulatory reasons, only Israeli residents who do not hold U.S. citizenship can open an account in Pepper.
Important Banking Procedures Each person who will appear on the bank account (i.e. your spouse) must be present with his or her documentation when you open the account. You will be signing forms confirming you declare taxes in your country of origin and all the money in your account now and in the future is yours (tax and anti money laundering forms).
Understanding Fees and Costs
The Israeli Fee Structure All Olim dislike paying banking fees, and who can blame you, the banks outside Israel do not charge for every transaction, whereas the banks in Israel do. Note that most banks charge a monthly service fee in addition to fees for individual transactions. In general, the system in Israel works in such a way that almost everything related to the bank is chargeable.
Typical Costs Monthly Account Maintenance₪10–₪30 (some free for Olim); ATM Withdrawals (Other Bank ATMs)₪5–₪8 per withdrawal; International Transfer Fee₪15–₪50 per transfer; Foreign Exchange Fee1%–3% of transaction; Overdraft Fees (Minus)High interest rates, 7%–12%
Fee Reduction Strategies A useful tip for Olim, especially Olim opening a new account, is that banks often offer fee waivers or discounts initially. But keep in mind that these fees usually rise after the introductory grace period ends. If you have a knack for charm, you might be able to negotiate with your banker to reduce your fees. This approach often works better for business owners and usually requires a direct request.
Special Benefits and Programs
Aliyah Benefits It’s highly recommended that you open your bank account and activate it with a deposit as soon as possible to receive your complete Aliyah benefits from the Ministry of Aliyah and Integration.
War-Related Benefits Recent programs provide relief for affected populations. Bank Hapoalim, the country’s second-largest lender, will give NIS 250 ($68) to young adults up to the age of 30, students and reservists, if they have a deposit account or current account balance of at least NIS 30,000 ($8,120).
Israel Discount Bank, the country’s fourth-largest lender, announced that its package is for reservists and small business owners and will translate into financial relief of up to NIS 375 per month, and more than NIS 1,000 per quarter.
Student Programs Students can also apply for student loans with low interest rates and deferred payment plans through most Israeli banks as well as through the universities.
Account Types and Services
Multi-Currency Capabilities All accounts are multi-currency. By default. In Israel, banks establish distinct accounts (or subaccounts) for various currencies and purposes: One account serves for day-to-day transactions like checks, transfers, bill payments, and deposits · Another is designated for investments · A separate account is allocated for saving deposits.
Credit and Payment Systems Generally, credit cards are issued by Israeli banks and the full outstanding balance will be automatically withdrawn/debited from your checking account once every month. Take note that most Israeli “credit” cards are actually more like debit cards – they automatically take whatever is owed out of your bank account on a specified date each month.
Apps for transferring money peer to peer like BIT and Paybox also require an Israeli credit card, making local banking relationships essential.
International Banking Considerations
Sending Money Overseas Sending money overseas from Israel can be difficult, so don’t close your foreign bank account. Although it is much easier nowadays to send money overseas from Israel than it used to be, it is still difficult and generally a lengthy and time-consuming process.
An affidavit that states that you don’t owe any taxes on the monies being sent overseas must be completed and submitted to your bank before they will honor your request.
Strategic Recommendations Suggestions: Maintain your foreign bank account even after you make Aliyah and sign up for online banking. Also, before you leave for Israel make sure your foreign bank account is set up for sending out wires and ACH transfers so that you will easily have access to your money.
Important Regulatory Considerations
Account Restrictions In Israel, the enforcement and collection of unpaid municipal bills is slightly more aggressive than in the U.S. Should one fail to pay municipal or government-related bills such as property taxes, parking tickets, Bituach Leumi, etc. a creditor has the right to place an Ikul (restraining order) on your account.
In such an event, your bank account can be frozen to the extent of the sum due to the creditor. An Ikul on your account can be placed without advance notice from the court.
Compliance Requirements Due to IRS regulations, Israeli banks have become considerably less accommodating to foreign citizens. Some banks won’t deal with foreigners; others demand large initial deposits; and others will open accounts but without student discounts on fees.
Practical Tips for Success
Building Banking Relationships Strange as it might sound, you should try and get to know your bank manager. A lot of Israeli banking is still done at your local branch, so it’s handy to have a familiar face there. Building a strong rapport with your banker can prove invaluable. It helps not only to secure fee reductions but also to navigate complex financial scenarios smoothly.
Account Management When you order checkbooks they take 3 days to arrive, and you must pick them up at the bank. Each bank branch works separately, if you want to pick up checkbooks or anything else at a different branch than the one you opened your account in, you must notify your branch.
Bankers can’t give you information on the phone unless you have a phone code; it is recommended that you get one.
Conclusion
Opening a bank account in Israel requires careful preparation and understanding of the unique characteristics of the Israeli banking system. Success depends on choosing the right bank for your needs, preparing proper documentation, understanding the fee structure, and building effective relationships with banking professionals.
Whether you opt for traditional banks like Hapoalim or Leumi, or embrace digital solutions like Pepper or One Zero, the key is understanding your specific needs and the available options. The Israeli banking system offers sophisticated services and growing digital capabilities, but requires patience and strategic thinking to navigate effectively.
For new immigrants, students, and international customers, taking advantage of special programs and benefits can significantly reduce costs and improve the banking experience. The time invested in understanding and optimizing your Israeli banking relationships will pay dividends throughout your time in the country.
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