Bank Leumi (TASE:LUMI) and Mizrahi Tefahot Bank (TASE: MZTF) have become the first two Israeli banks to accede to Bank of Israel Governor Prof. Amir Yaron's call to pay interest on consumer current accounts. The banks also fear legislation to increase tax on their growing profits as interest rates rise. However, the benefits being offered are extremely limited. The banks will also reduce the interest paid on overdrafts.
Leumi will pay 2% annual interest on current account balances of up to NIS 25,000 to customers who pay their salaries or pensions into the account and have two Leumi products - either a mortgage, a credit card with average monthly expenditure of at least NIS 4,000, or a securities portfolio. This will come into effect on August 1.
Leumi will pay 1% annual interest on current account balances up to NIS 10,000 to customers who pay their salaries or pensions into the account and have either a mortgage from Bank Leumi or a credit card with average monthly expenditure of at least NIS 3,000. This will come into effect on July 1.
At the same time Leumi will reduce overdraft interest rates by 2% for private customers with first stage overdrafts and by 1% for second stage overdrafts.
Mizrahi Tefahot will pay 2% annual interest on current account balances of up to NIS 25,000. The benefit is for customers who hold at least a combined NIS 50,000 in the bank in their current accounts, deposits and securities portfolio. Income tax on the interest will be deducted quarterly.
Mizrahi Tefahot will also reduce overdraft interest by 1%-2%. Annual nterest currently charged on overdrafts ranges between 13.25% and 18.45%.
Published by Globes, Israel business news - en.globes.co.il - on June 29, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.