I’m sure you can remember when you opened that bank account and received your first salary how nice it was to sign on that dotted line for that extra NIS 20,000. The NIS 20,000 you vowed never to touch and only accepted just in case an emergency popped up and you desperately needed the extra cash. Fast forward one year later and you have not only maxed out NIS 20,000 but that glaring red figure on your computer screen says you actually owe NIS 25,000! How come? Of course it’s because of all these holidays…….if only.
Following credit card debt overdraft fees are the next highest debt currently in Israel. But as our Central Bank Governor, Stanley Fischer kindly reminded us that we should be grateful for our overdrafts facilities since in the US no such thing exists for personal accounts. Instead you are fined immediately once you reach in the minus of your account and have to make a special request to pay it off by credit card.
So thanks to the banks here in Israel we are allowed to drown ourselves in debt by accessing overdraft facilities and credit cards. But really are the banks to blame? They are fulfilling their objective – to make a profit. So our objective should be understanding this system and working it to our advantage. So what really are overdraft facilities and how do you get access to it?
First to have an overdraft facility you must have a personal account better known in Hebrew as “cheshbon osh” (Over V’Shav). This operates as a regular checking account as it allows you to do most services including paying utilities, drafting personal checks, etc. Once you have your “cheshbon osh” (Over V’Shav) and a salary slip your banker then offers you an overdraft limit that takes into account all your assets. Naturally this “extra cash” is tied to bank fees. But as you will soon learn everything in Israel is negotiable so if you plan on being in overdraft make sure to develop a relationship with your banker because sooner than later you will need him. But seriously regardless of your financial situation it is important to have this relationship as it always comes in handy. So in a nutshell this is how easily we can access an overdraft facility.
But the question is how come if we are given NIS 20,000 we are allowed to spend NIS 25,000? Normally this won’t happen but should you have a credit card with a limit of NIS 10,000, an overdraft limit of NIS 20,000 and it’s Pesach it effectively means that you have NIS 30,000 to spend in 1 week. So maxing out your credit card, writing some cheques and the occasional cash withdrawals can definitely ensure your Seder has every dish to appease your 40 guests and you have spent NIS 25,000 in doing so.
But don’t be fooled by the time the bank’s computers refresh and the country returns to its normal runnings on Sunday you will be given 90 days to clear that excess debt. But don’t sweat yet! You don’t need to pay off the entire sum of NIS 25,000 but you do need to get back within your overdraft limit of NIS 20,000 and therefore pay the difference of NIS 5,000 immediately. Failing to do so gets you blacklisted and can become very problematic in the future. So please NEVER go over your overdraft limit and not deal with it.
First it’s illegal and if you are here long enough you know that one thing that works well in this country is their ability to recover money owed to them by all means possible. Secondly, an exit ban can be placed on you making it impossible for you to leave the country. So no chance of escaping and running back to USA or UK.
Instead think before you spend but if you must dip into that overdraft be careful not to go over the limit. However, hopefully by the end of this series you wont even need to entertain such thoughts as your bank account would always be in the positive.
FANGA to an overflowing bank account!