Wednesday, August 10, 2011

The Cheapest Way (that I've found) To Change Money in Israel

Many Olim continue to earn a significant portion of their income from sources in the United States, and are paid in dollars to their American accounts. This raises issues regarding taxes and reporting in Israel (which I won't address). And, with the United States printing money as if it wasn't worth more than the paper it's written on, that's slowly becoming the reality as the value of the dollar plummeted over a period of months, meaning that people have experienced a painful reduction in salary of over twelve percent during that time period. Combine that with the continued rise of the cost of living here in Israel, and you've got Olim looking harder than ever to squeeze every possible cent (or agorah) out of their paychecks. An additional challenge Olim also face is the conversion of those dollars into shekel. Sure, you can pay for your groceries with an American credit card, but that doesn't cover "all" of your expenses, and many credit cards charge per-item fees. (Capitol One doesn't). But most people can't pay their rent on their credit card, nor many other day-to-day expenses that arise and need to be paid in Shekel. What's the best (read here: cheapest and easiest) way to convert?
Many people used Cheerfully Changed, the now defunct money conversion business with locations across Israel wherever there were Anglos. Many made the mistake of converting large sums of money at a time, using Cheerfully as a kind of private bank, which would then issue payments at the direction of clients. From what I gather, the owner of CC found himself sitting on a pile of money - like any bank does - and instead of just letting it sit there, he decided to invest it. You can guess what happened. He did not invest wisely, suffering devastating losses - especially devastating as he wasn't really investing his own money. Banks do the exact same thing, but they usually have deposit insurance. This of course had led to lawsuits, dinei Torah, and people out of large sums of money.
I too was a faithful client of Cheerfully, but I'd only change enough money to pay my rent each money. All I had to do was leave a voided check at their office (which I did), and then they would withdraw money from my American account and deposit that money, magically converted into shekels, into the account of my landlord. For this service they charge the generally accepted fee of 1% of the check amount. That's not exorbitant, and seems to be the going rate.
With the demise of CC, I found myself scrambling for a new company who would do the same thing, but my contact at a new outfit in Beit Shemesh explained that they hadn't yet set up the service and that I'd have to mail him signed blank checks to use one at a time. I really do trust the guy but didn't want to use that option. In my search for a different solution, I found one that's not only easier, but actually cheaper: the Israeli bank.
Yes, that's right. I'm pretty sure that my bank - Bank Leumi - is the cheapest way to change larger sums of money. I'll explain.
First of all, let me just say that I love - really love - Bank Leumi. Apparently, as Kiryat Malachi is not a town generally known for its affluence, our bank likes wooing Anglos who they think have money, and they always give us amazing treatment. I never - really, never wait on line at the bank. It took them about an hour to lend us a ridiculous amount of money for our car. I have no idea how the service is at other branches (because they all act independently), but I highly recommend the Kiryat Malachi branch of Bank Leumi.
When we opened up our accounts upon moving to Israel, we opened up both a regular shekel account as well as a dollar account. This way, we can make dollar deposits into our Israeli bank. Sadly, they charge a not insignificant service fee to deposit checks - over three dollars per check, so it only makes sense to deposit large checks. Eighteen dollar checks for birthdays get mailed back to the States for deposit. (As an aside, it's worth noting that Israeli banks charge fees for everything - literally. Just checking your balance at the ATM costs about a shekel and a half. Every bank does this. So, if you're used to free everything at your bank in the States, it's a little different here.) I also discovered that on the Bank Leumi website, I can do automatic transfers from dollars to shekels for the small fee of a half-percent. Then, I can also automatically pay my landlord, again online, depositing my rent directly into his account.
So, if I deposit a sizable check of a few thousand dollars, the three dollar service fee is rather small, and instead of paying the full percent surcharge that the money-changers charge, I pay half that. Plus, I get the security and convenience of dealing not with a private firm, but with a real bank.
If you know differently, I'd love to hear from you. But we've always "known" that Israeli banks charge ridiculous fees and that it's always cheaper to do business elsewhere. I truly was surprised to discover that when it comes to changing money, the easiest and cheapest option I could find was - Bank Leumi.

February 2012: Update to the post!
Last month, my wife deposited a check for $3,000 into our dollar account at the bank. When I got the statement, I learned that they had charged me a fee of $28.50 to cash the check. What!?! I couldn't believe it. I went into the bank to give them a piece of my mind, and they tried to explain that there are different ways to handle checks, and that for a $1,000 dollar check, they only charge the lower fee ($3 per check), but for an amount as large as $3,000, they have to run the check in the more secure way (for them), that has an additional $25 fee. I made it clear to them that if they weren't willing to work with me, I'd find someone who would (Forex maybe? See the comment below), but that I wasn't going to pay almost thirty bucks! to deposit a check. I have learned that here in Israel, you must speak your mind. You need not yell, but if you want someone to do something for you; if you want them to work to find a better way to do it, you've gotta speak up. Otherwise, you'll always end up getting the worst possible deal. People find this fact to be a frustrating aspect of Israeli culture. I tend to agree with them.