December 19, 2003
The credit card companies are considering raising their monthly fixed charges - currently NIS 6.3 to NIS 7. Given that there are some 3.6 milion credit card-carrying individuals in the country, the companies stand to rake in an additional NIS 30 million annually from the extra 70 agorot per customer per month.
The credit card companies are also planning to raise their fees by 10 percent, according to industry sources. The fees in question are the service charges for continuing transactions, such as purchases with deferred payments. A typical fee is currently 45 agorot for a relatively long-term deferred payment arrangement - and this charge may be raised to 50 agorot. The increase of 5 agorot may not seem like much to an individual cardholder, but to the credit card companies, the total benefit would be significant.
Israelis conduct some NIS 80 billion of transactions using credit cards a year, a third of this on deferred payments. As the average amount of a credit card transaction stands at NIS 750, then on average the total sum spent on credit cards would stem from some 35.5 million transactions. The average deferment spans four payments - bringing the total deferred transactions to some 140 million monthly intallments - so that on an increase of 5 agorot per monthly deferred payment, the credit card companies will collectively enjoy a further NIS 7 million.
The companies have not yet applied to the banking supervisor for the necessary approval concerning increases in charges, though this is expected in a matter of weeks.
The credit card companies are not the only ones moving to increase fees. Bank Leumi took an extraordinary step yesterday, announcing that it would start charging for cashing checks over the counter at its branches, starting from January 1, 2004. The fee is clearly aimed at discouraging customers from using tellers, and Leumi is the first to introduce such a charge. Sources in the industry described the move as "interesting," which suggests that other banks may follow.