Credit Cards and Lines of Credit

By law the bank does not have to give you any credit line. Credit lines are a result of your assets in the bank, your credibility with the bank, and even a bit of the impression that you make on the bank personnel. It is easier to receive a credit line for those who have a steady salary. The higher your salary and the more money you have in savings in the bank, the more credit you will receive. Please remember that this is not free credit; interest is very high here and very difficult to calculate in advance (read the small print!).

A credit card is a very important instrument and very flexible. In today`s electronic society, it is very difficult to live without a credit card! It is very important to understand that in Israel most credit cards are actually debit cards on your checking account.

Whatever you purchase is automatically debited from your account at the billing date for your month`s purchase. Some credit cards give you the option to buy on "credit" which means that a certain amount from the total sum owed is debited from your checking account each month. The credit card company is not giving you this option out of the goodness of its heart—they charge you interest for this option and sometimes an additional charge as well.

Be aware that credit card fraud does exist in Israel. Always keep your credit card with you and never let anyone else use it. Never keep the PIN number together with the credit card.

While credit cards are insured for loss and theft, make sure that you are aware of the scope of the insurance for the specific credit card that you hold. Most of the time, you will find that the insurance given on your credit card is not 100%. It is also very important that you keep the contact information of what you have to do and to whom you have to report such a loss or theft in a safe place.

How Israeli Credit Cards Work

• In Israel, credit is mainly granted from your bank and not from a credit card company, although there are a number of private credit card companies that offer you credit cards such as for Paz gas, SuperPharm, SuperSol, etc. Although you may be getting a discount on the items that you purchase with this card, it is important for you to be aware that they also charge a high annual fee for the maintenance of such cards—around 120 shekels annually (they will usually give you the per month cost to make it sound much less). However, unlike other countries where there are set fees, in Israel it is possible to negotiate your own specific credit card fee depending on how much money you spend using your card. The more you spend—the more likely the bank is to waive your fee!
   
• The full balance on the credit card will be automatically withdrawn from your checking account on the date you choose (e.g., The first of the month, the 10th of the month or the 15th of the month, are the usual choices). You should pick the date most convenient for you based on when your monthly salary is deposited into your bank insuring that you don`t go into overdraft as you will have to pay interest on any "minus" (Your "minus" is the amount of money you have spent from your account over the actual amount of money that you have in your account at a specific time.)
   
• You will receive a monthly statement in the mail from the credit card company for the purchases made the previous month. Most companies provide Internet access to your statements as well.
   
• Your credit framework (how much credit you are entitled to) could be any shekel amount varying according to parameters such as your salary, bank savings, securities you give to the bank, etc.
   
• If a store doesn`t have a magnetic credit card reader, your best option is not to complete a purchase there. If you nevertheless allow your card to be swiped in the old fashioned machine—make sure that you destroy any carbon copies left behind.
   
• Always keep track of your purchases. You would be surprised at the amount of mistakes made by credit card companies.

Credit Cards, Checks and Credit Lines for Minors

Banks may issue credit cards to a minor who is 15 and is employed, as stated above. But no minor will receive a checkbook before the age of 16. Between the ages of 16 and 18, the bank will stamp in the checkbook that account holder is either a minor or juvenile. In addition, the amount of withdrawal for every check is limited to 400 shekels.

Minors can receive a bank card with which he can withdraw cash. The limit is 400 shekels per day, on the condition that the account is not in deficit. It is not possible to have credit lines for minors without the parents consent. Under no circumstances can the bank allow a withdrawal over the minor’s credit line. It is possible to have a very limited debit card (again for purchases of up to 400 shekels per day).
 

Sincerely,
 

Tzvi Szajnbrum, Attorney at Law