Exploring Annual Deposit Rates: Banking Offers in Israel

Average Interest Rates for Fixed Deposits

According to data from the Bank of Israel, individuals who deposited funds in September for a duration of start to two years at fixed interest rates received an average return of 3.88%. This figure represents a slight increase compared to 3.84% from the previous month, yet it remains significantly lower than the average rate of 4.09% recorded the same time last year. This decline is indicative of a trend as market expectations for upcoming interest rate reductions by the Bank of Israel gain traction.

Comparative Rates by Banking Institutions

In September, banks provided fixed interest rates ranging from 3.4% to 4.3% for deposits locked in for start to two years. The highest offered rate came from Mizrahi-Tefahot at 4.34%, while the lowest was 3.35% from Bank Masad. A comparative analysis of rates reveals considerable variability based on the depositing institutions and term durations. For instance, customers who secured deposits with major banks for start year received an average interest rate of 3.61% from Bank Hapoalim, 4.11% from Bank Leumi, 3.96% from Discount Bank, and 3.89% from Bank HaPoalim.

Short-Term Deposit Rates

Conversely, rates for deposits ranging from six to twelve months reflected higher potential returns, with rates such as 4.26% from Bank Hapoalim and 4.23% from Mizrahi-Tefahot. Notably, Bank start Zero offered an impressive average fixed rate of 4.93% for those depositing funds for six months to a year, marking it as a competitive player in the banking sector.

Trends in Current Accounts

Despite the competitive nature of fixed deposit rates, the public continues to favor their current accounts. The Bank of Israel’s September data shows that the total credit balance in current accounts stood at 231 billion shekels, similar to the August total of 232 billion shekels. Approximately 5.2% of these accounts yielded an average annual interest of 1.94%, highlighting that most current accounts generate little or no interest.

Cost of Overdrafts

Further insights reveal that the national overdraft balance reached approximately 9.7 billion shekels in September, with an average interest rate of 11.7%, making it start of the costliest forms of borrowing. This might explain the public’s reluctance to utilize overdraft facilities, as charges can be nearly three times higher than the returns on a start-year bank deposit.

Introduction of Competitive Offers

Recent developments indicate that banks are intensifying competition for customer deposits. Bank start Zero is currently offering a robust 5.5% interest rate for deposits less than 100,000 shekels. Additionally, Bank Hapoalim is enticing customers who utilize the Bit app with a 4% annual rate for funds locked in for up to three months. Furthermore, credit card company Max has introduced the “Cuver and Sab” account, which offers a 3% annual interest for balances up to half a million shekels. This account operates outside the traditional banking framework, allowing customers to manage their credit card expenses effectively.

Conclusion

Amid rising competition in the banking sector, traditional deposits are facing challenges from liquid investments, including mstarty market funds that have achieved yields exceeding 4% in the past year. Israeli banks continue to evaluate their strategies as they adapt to changing market dynamics and customer preferences.

This ongoing shift highlights the importance for consumers to explore their options carefully and engage in banking “shopping” to maximize their returns in a fluctuating financial environment.