A study of the draft version of the credit card companies' new price list reveals that credit card fees will range from NIS 14-20 a month (NIS 168-240 a year). The rates will be set by issuing banks and may differ considerably from issuer to issuer. Thus, for example, the fees on an Isracard credit card issued by Bank Hapoalim (LSE: 80OA; TASE: POLI) could differ from the fees on an Isracard credit card issued by Bank Otsar HaHayal.
It is believed that companies issuing non-bank credit cards, especially revolving credit cards, will charge significantly lower fees, to encourage customers to switch to the more profitable non-bank credit cards. The three main credit card companies are Bank Hapoalim subsidiary Isracard Ltd., Bank Leumi (TASE: LUMI) subsidiary Leumi Card Ltd., and Israel Credit Cards-Cal Ltd. (ICC-Cal), which is jointly owned by Israel Discount Bank (TASE: DSCT) and First International Bank of Israel (TASE: FTIN1;FTIN5).
A senior credit company executive stressed that NIS 14-20 per month represented the effective charge and that the official price list would be 30-40% higher. The difference stems from the discount that credit companies will offer customers who spend more on their cards than the set monthly minimum sum.
At present, credit card companies charge customers three main fees - a limited warranty fee, a handling fee, and a membership fee, which is contingent on a minimum number of transactions a month. These will be replaced by one uniform card fee, after the new bank fee legislation comes into force.
Published by Globes [online], Israel business news - www.globes-online.com - on May 5, 2008
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