6 weeks to aliyah – Personal Finances

In the past few months, we have had to make purchases and pay contractors in Israel, pay bills there, transfer money and convert dollars to shekalim. All of this would hardly make us experts in how to best go about doing all of this, but we have learned a bit along the way so that we know some procedures that have worked well for us and a few that have not. There are books and postings and the like that have mentioned a few of these tidbits but they are often hidden amongst a lot of other information so some of the best practices that I have learned do not really stand out. I thought that I might share some of these hints today.

I am surprised that so few people seem to know about the “World Mastercard”. Several banks offer this or versions of it (including most notably Capital One and HSBC) but it is certainly a product that you should inquire about. The World MC comes in handy for both the oleh as well as for anyone travelling anywhere outside of the US, even as a tourist. The two most notable features of this card is that it charges no foreign transaction fee and that it covers some insurance when you rent a car in Israel.

Most credit cards will charge some foreign transaction fee for any purchases made outside of the US. This fee is often around 3% which might not add up to too much when buying small items or paying for meals in restaurants. But when you make larger purchases or when you make enough purchases, perhaps in a trip to Israel, the 3% can really add up. The World MC usually charges no such fee. They will of course have to calculate a rate for money conversion from NIS to dollars, but I have generally been happy with the rates that they use.

The other feature comes in handy when renting a car. If you call your credit card companies and ask if they will cover you on your accident insurance )for example, collision damage waiver) when you rent abroad, they will usually happily tell you that they do. But if you ask them to confirm that you are covered in Israel too, they will inform you that Israel is not covered, along with Beirut, Belfast and Jamaica - strange bedfellows. But the World MC will generally cover Israel as well. It still is important to tell the rental company that you are covered since most people don’t have this card so they usually tack on the charge without a second thought.

Transferring money to Israel can get to be rather expensive. Most US banks will charge anywhere from about $25 and up for an international wire transfer and the Israeli banks will also charge a fee when they receive the money. I try to use my World MC to pay anything that I can to avoid all of this when possible. When using the card is not possible then a few other options should be considered:

There are a number of foreign exchange companies that will offer a reduced charge for converting your money. In general, you must wire your money to them and they will hold it until you tell them to convert it and how much to convert. They will then place your money into the Israeli bank of your choice, thereby allowing you to possibly save a few points on the conversion rate. Although this sounds good, I have not found that the difference in rate was beneficial enough to warrant the added complexity of passing your money through yet another set of hands and since they don’t allow you to write a check to them, you are still not avoiding those wire fees.

When you establish a relationship with a bank in Israel, you can often negotiate a preferred conversion rate that might even be capped and could prove to be quite competitive with the forex companies.

Finally, there are some banks that have a presence in Israel that maintain a connection with their US counterparts. For the most part, the Israeli banks (e.g. Bank Leumi, HaPoalim, Israel Discount Bank, etc.) will tell you that they have nothing in common with the branches in the States other than the name. But I know for example, that HSBC in the US considers the HSBC in Israel to be part of the parent company if not quite a branch of it. Therefore if you are an HSBC customer in the US then you can open an account at the HSBC in Israel and connect your online presence of those accounts. Once that is done, they will allow you to transfer money between those branches for free.

Well, this is a bit long for a blog but still short for a novel, and I hope it offers just a few pointers that you will find useful.