Credit Cards in Israel

How credit cards in Israel work:

There exists a great deal of misunderstanding about credit cards in Israel and how they work. Israel is somewhat unique in that although credit cards exist, they’re not ‘credit’ cards in the true sense of the word. They’re far more comparable to what you’d consider a ‘debit’ card in other countries. Although the cards do have MasterCard, Amex, Visa or Diners printed on the front, they do not function the same way. Although the money you spend does not come out of your bank account immediately, the entire balance will come out of your account each month.  You do get to choose the date that this happens, but it still means your maximum credit period is essentially one month. Though there are some exceptions which we’ll detail below, this is clearly vastly different from the US or Europe where you can make small payments.

Who issues credit cards in Israel?

Credit cards in Israel are generally issued by your own bank, and you must go to the bank to apply for a card. The exception is the CAL company, which operated independently of the banks.

One way of getting true ‘credit’:

If you’ve ever been to an Israeli supermarket, you’d have heard the phrase “Cama tishlumim’ or ‘how many payments?’, when paying for your groceries. This is the exception by which your credit card can give you true credit. If you want to take these ’tishlumim’, you can usually choose how many months you wish you wish to make that specific payment over – normally it’s 1-12 months, sometimes more. When you take something on payments, the whole amount comes off your credit limit, but only the monthly amount is taken from your bank account.

Getting Confused? It is unusual – so let’s break it down.

  1. You go to your bank, say Bank Mizrahi, and get a MasterCard with a limit of ₪10,000.
  2. They ask you which date you want to make your payments on. Let’s say you choose the 15th.
  3. All  the money you spend in restaurants, bars etc will be added together and come off your account on the 15th.
  4. When the money comes off, your credit limit will once again be ₪10,000.
  5. If, however, you buy some shopping for ₪5,000 and ask in the store for 10 payments, then only ₪500 will be taken from your bank account at the end of the month but only the amount you pay goes back on to your credit limit. So after the month ₪500 is taken from your account (and each month until paid off), and your credit limit will go to ₪5,500, then ₪6,000 etc.

What credit limit can I expect?

Generally speaking, you should expect a lower credit card limit in Israel than the United States and Europe. Banks in Israel these days are somewhat more cautious about giving out credit. If you are a new resident of Israel then even more reason why your limits are likely to be very low, possible even only a few thousand shekels. Once you’ve banked with the same bank for a while and showed a regular income, you can go in and request a new limit.

Using  foreign credit card vs. Israeli credit card

A common question, is all of this being taken into account does it make more sense to use an Israeli credit card of your foreign credit card when you’re in Israel? The answer isn’t simply but there are clear advantages and disadvantages of both. The protection systems that foreign credit cards have do not generally apply in Israel. If there is a fraudulent transaction, it can be very difficult, or impossible, to do anything about it in Israel.  Likewise, the reward points systems are poor in comparison to the rest of the world, and if you want to make one large transaction on credit, it’s not ideal. On the other hand, using a foreign credit card can be expensive if you don’t have a suitable currency plan. All in all, there is no ‘correct’ answer other than taking caution and researching both options properly.