Sunday, March 14, 2010

JoeSettler’s Guide for a Safe Financial Aliyah

One of the things no one is going to tell you when you make Aliyah is how to keep your money safe. And what I am about to tell you may be the best pieces of financial advise you will get.

As most people quickly realize, rules and contracts can be quite flexible in Israel (and not in your favor). Anyone who has a cellphone plan tends to learn that within 6 months of signing up and having their plan changed on them.

But what is more worrisome is when can happen with your bank or credit card.

The MOST DANGEROUS document you can sign in Israel is the Hora’at Keva (Direct Withdrawal Order).

Many companies and organizations request that you sign a Hora’at Keva document if you want to sign a contract/subscription with them. This may be a phone company, the Iriya/Moetza, a gas company, a car leasing company, or even a donation to a cause.

This document lets them withdraw their payment directly from your bank account.

They’ll tell you that it is easier. They’ll tell you that they require it. They'll tell you it's safer.

DON’T DO IT.

I can’t emphasize this enough (and I speak from multiple experiences).

Besides that you should always check what you need to pay someone before you pay it, there are serious ramifications to this document.

This document grants these organization full access to withdraw however much they want from your account. I mean it.

The banks generally do not check to see if there is a limit in place (if the specific order even mentioned a ceiling) – and it can be an innocent mistake, or it can be on purpose, but once you sign this document, I will guarantee that at some point some organization will pull out more than they should (or more than you think they should) - much more.

And depending on the organization, getting your money back may be difficult if not impossible.

The problem also extends to credit cards. Once an organization has your credit card, many of them keep it on file. Some of them have been known to decide on their own to extend your subscription, your donation or even to buy you a gift.

Some credit card companies are more responsive than others when this happens, but I have yet to hear of them penalizing the seller for these criminal actions.

So what are your options?

Sometimes you have to have a Hora’at Keva. And far too often you need a credit card (and did you notice that the banks don’t offer debit cards – as far as I know).

I recommend you open an account at the Post Office Bank – perhaps even two (one under your name, the other, your spouses). If you must do a Hora’at Keva, link it from there, and only put in enough each month to cover the withdrawals you expect that month.

This way you can put a ceiling on how much money someone can steal in any given month from your account. Splitting it between 2 accounts drops that ceiling even lower.

As for the credit card, my experience has been that you can (probably) trust in the credit card company to deal with it at their own pace, once you fax them your detailed complaint and make some followup calls, or you can go back to the Post Office and buy prepaid credit cards from them.

The Post Office Prepaid Credit Cards are much closer to debit cards. You fill them up (once) and that’s all there is in them.

They don't offer any protection, and they don't work everywhere and have other limitations, but if you want to do a one time deal with a company and are concerned they may charge you again in a few months time, this may be the way to go.

All this is a little extra work, but if it saves you a few thousand shekels in fraudulently withdrawn money, it’s worth it.



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10 comments:

tzip said...

our visa cal card that is linked to our bank hadoar account is a debit card. we can only charge what we have in the bank. we can not do tashlumim with it.

JoeSettler said...

The Post Office seems to offer the most advanced banking services!

Jameel @ The Muqata said...

I hereby disagree with this post.

We use hora'at keva for a multitude of things: School, Electric Co, KVish 6, Gas Co, Bezeq...

We review our VISA statements monthly for spurious charges, and VISA has been decent about canceling those that were wrong.

JoeSettler said...

Jameel,

You can disagree about the Hora'at Keva, but since I (and other friends) have experienced this abuse of the banking system more than once (including Israeli friends), I am putting more value in my experience.

I'm glad Visa has been helpful in canceling all those spurious charges.

Any particular reason you've had so many that they were decent with?

JoeSettler said...

Jameel,

The Electric Company quite often estimates your bill instead of going and checking your meter.

In your case, your estimates have been lower than the meter, but we've had estimates that are much higher that the actual usage.

Should they be allowed to pull out whatever amount they want based on an estimate?

keren said...

That is the same problem, as if they send you a bill, and you have to argue before you pay, and if you do not pay, you will be charged interest etc, threatened with cut off electricity.
Standing orders through Visa are easlier to deal with and prevent me forgetting to pay.
In addition, we will not be able to register our daughter for Gan if we do not have a standing order, and I still did not do this.
I do however, agree with you about the problems, as the council never tell me how much money they are taking and why.

Gee a Moron said...

My experience with the electric company has been favorab;e. When their estmated bill was way off base and I called/emailed them the actual reading they issued a corrected bill and returned the difference.

realRightWinger said...

I personally find the trip to the P.O rather tiresome - with some half brained nitwits maning the posts. I usually end up waiting at least 30 mins - just to get a parcel delivered. I would avoid the P.O at any oppertunity

Neshama said...

Joe, it seems you did a good thing to warn people. Obviously from the replies, not everyone's experience is the same, which means that there REALLY ARE discrepancies, and everyone should be vigilant. Complaining right away keeps them on their toes, especially if they get the message that they are being WATCHED closely.
I very much like the 'practical' issues being written about.

Ben-David said...

We got out of commercial banking a few years ago - we moved over to the Post office.

We have been able to eliminate all Hora'ot Keva except for our one child's school. The other schools accepted post-dated checks.

We do NOT have a credit card - just the Visa-cal debit card offered by the Post office.

The Hora'at Keva is just one symptom of how people lose control over their money in Israel.

The other big way to lose control is to start living on your overdraft. This is how commercial banks make their money - by extending automatic line of credit when you dip below zero.

This rapidly becomes a habit.

So does purchasing items in multiple credit-card payments - which is much more heavily promoted/socially acceptable than in the US.

So the ABSOLUTE BEST advice for new olim is to bypass the commercial banks entirely.

Open a post-office account. It carries NO line of credit - there are no numbers below zero.

The debit card offers all the convenience of a credit card, without the temptation to buy in costly payments.

Limit the hora'ot keva - and you retain control over your finances.

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