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Israeli Credit‑Card Consumers Face New Burdens, Study Finds
A fresh consumer‑rights investigation has exposed a troubling trend in Israel’s banking sector: a surge in credit‑card fees and interest rates that many consumers feel they cannot afford. The study, which was published last week in the Jerusalem Post’s consumer‑rights column, draws on data from the Bank of Israel, the Ministry of Finance, and a wide-ranging survey of more than 3,000 Israeli households. Its findings paint a stark picture of a market that is moving further away from the “fair‑play” model that has long been promoted by consumer‑advocacy groups.
How the Study Was Conducted
The researchers began by compiling a database of all credit‑card issuers operating in Israel. They then cross‑referenced the issuers’ public disclosures, the banks’ internal fee schedules, and the statements posted on each card’s website. In addition, the team surveyed consumers to gauge how often they reviewed their credit‑card statements and how often they had a clear understanding of the terms and conditions attached to their cards.
The report also examined the “interest‑rate caps” that were put in place in 2015 by the Bank of Israel. Those caps were originally intended to protect consumers from predatory lending. However, the researchers found that the caps have not been updated for more than half a decade, and that many banks have found ways to work around them by issuing credit‑cards that do not trigger the cap.
The Big Numbers
The most alarming statistic is that 68 % of consumers who paid their credit‑card balance in full at the end of each month reported being charged a fee that they did not expect. That fee, the report shows, is on average 12 % of the balance. For a typical $2,000 balance, that translates into a $240 fee—an amount that most respondents would never have anticipated.
The interest‑rate data is equally troubling. The study shows that the average effective interest rate (including all fees and compounding) has risen from 15.8 % in 2015 to 19.4 % in 2024—an increase of nearly 3.6 % in just nine years. That is particularly striking given the relatively low inflation in Israel over the same period. The report notes that the average interest rate on credit‑card balances in the U.S. is 17.7 % (according to the Federal Reserve), meaning Israeli consumers are paying significantly more for similar products.
The researchers also found that “balance‑transfer” offers, which were meant to help consumers pay off debt, are often laden with hidden fees that can double the effective interest rate over a 12‑month period. The study cites a case in which a major bank offered a 0 % interest rate on balance transfers for 12 months, but charged a 3 % fee on the transferred amount, which, when combined with the bank’s high standard interest rate, effectively made the offer less advantageous than consumers believed.
Consumers’ Reactions
When the study was released, it sparked a wave of comments from the public, many of which were shared on social media and in the Jerusalem Post’s comment section. A 42‑year‑old teacher from Tel‑Aviv wrote, “I’ve always thought my card was a safety net. I never knew I was paying this much in hidden fees.” A 29‑year‑old marketing specialist in Haifa added, “We’re being told it’s all part of ‘flexible banking,’ but it’s basically a trick to keep our debt levels high.”
A number of respondents cited “inadequate disclosure” as a major problem. The study points out that the average consumer spends less than 90 minutes reading a credit‑card contract, and that many of the most important clauses—such as the penalty rate for late payments—are buried in dense legalese. In fact, the researchers found that only 18 % of consumers correctly identified the “penalty interest rate” after being given a copy of the contract.
The Response from Regulators
In response to the study, the Ministry of Finance released a statement last month confirming that it would convene a task force to examine the banking sector’s fee structures. The ministry said that it is considering a “review of the interest‑rate cap” to ensure that it remains aligned with the current market conditions.
The Bank of Israel, which regulates the interest‑rate cap, issued a press release saying that it will “continue to monitor the banking industry’s practices and take action where necessary.” The bank’s chief economist, Dr. Yitzhak Shalom, stated that the bank is “open to discussions with the industry” but cautioned that “any changes must not jeopardize financial stability.”
A senior executive from the Bank of Israel added that the institution has been collecting data on consumer complaints and that it plans to release a white paper by the end of the year. However, the study notes that that paper has yet to provide concrete recommendations beyond a general call for “greater transparency.”
What the Study Means for the Average Israeli
The study’s most salient takeaway is that Israeli consumers are paying more than they need to. The data suggest that the current credit‑card landscape is not as consumer‑friendly as many believe. While some banks still offer “free” credit‑cards with no annual fee, many of those cards come with high interest rates and numerous hidden charges that can quickly erode any benefit.
Consumers are encouraged to review their credit‑card statements regularly, to compare offers from different banks, and to demand clearer disclosures from their lenders. The study also calls for the introduction of a “one‑stop” consumer portal that aggregates all the fees and rates associated with a given credit‑card product, allowing shoppers to compare apples to apples.
Final Thoughts
The Jerusalem Post’s consumer‑rights article brings a timely and critical issue to the public’s attention. In a country where consumer protection is usually taken for granted, the study demonstrates that the reality of banking practice can be far more complex—and often less fair—than the headlines suggest.
If the recommendations made by the Ministry of Finance and the Bank of Israel take root, the long‑term result could be a more transparent and equitable credit‑card market. For now, however, Israeli consumers remain caught in a system that may be pushing them into higher debt with fewer visible safeguards. As the story unfolds, both the public and the regulators will have to keep a close eye on the data to ensure that the market does not deviate further from the consumer‑centric model that was once a hallmark of Israeli banking.
Read the Full The Jerusalem Post Blogs Article at:
[ https://www.jpost.com/consumerism/article-865825 ]