Banking Charges – “Force Majeure”?

Israelis complain about high banking charges. We complain, but not many of us actually do something about it. Here’s a personal story.

Like most people, I don’t look at my banking charges often. But last week I had a slow week at work, so I took a look. I focused what the bank charges me for securities, i.e. commissions for buying/selling securities, including the infamous “management charges” (what used to be called “דמי משמורת”). When I added up the numbers for the past year, I almost fell off my chair.

You see, a few years ago I complained to my bank manager about this issue, and she promised to look into it. She came back after a couple of days with reduced charges, in some cases 50% less. “Well below the market rates”, she said. It all sounded good, so I didn’t check further and secretly patted myself on the back for being such an alert and savvy consumer.

This is why I fell off my chair; I couldn’t believe I was paying this much to the bank after I had negotiated those reduced charges.

So I spent a few hours last week speaking with private brokerage houses in Tel Aviv. I received offers from three places and summed them all up in a spreadsheet. A quick calculation showed that I could save more than 90% if I moved my portfolio from the bank to a private broker. Initially I thought I had gotten the numbers wrong, so I double-checked. No mistake: savings of well over 90%.

I signed up with one of the brokers. Took me an hour. I didn’t even speak with my bank as I thought that after they gave me a deal that was “well below the market rates”, there was no way they could give me a further discount of 90%. I assumed their cost structure simply does not allow them to compete with private brokers and it is what it is.

I was wrong. I went to the bank last Thursday morning and filled out a form to transfer the portfolio to the brokerage house. A few hours later I get a phone call. The bank is prepared to give me rates that that were even lower that what the brokerage house gave me. In other words, simply by showing I was serious about taking my money out of the bank, the bank suddenly found it possible to charge me a fraction, a mere few percent, of what they’ve been charging me for years.

The rational economic decision to make now would be to stay with the bank. But the feeling of having been robbed (there is no other word for it) continuously for years by this institution is pushing me to do the irrational thing and move the money out of the bank anyway.

I will make a final decision in the next couple of days, but the bottom line is that nothing – not even banking charges – should be taken for granted in this country. They are not a “force majeure”.

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