Money in Israel: Banks, ATMs, Cards & Currency Exchange

31.07.17
7 minute read
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Israel is a fascinating place to visit, from the historic sites of Jerusalem to the bustle of Tel Aviv. Tourism is big business, with millions visiting every year and more museums per capita than any other country. But whether you’re visiting for work or pleasure, for the museums or the beaches, you’ll need to get to grips with how money works in Israel.

Read on to find out what you need to know about the country’s currency, how to exchange and use your money, and a look at Israel’s banking system.

What’s the currency in Israel?

Israel’s official currency is the shekel. It’s formally called the New Shekel, having replaced the ‘old’ shekel in 1985. There are 100 agora in a shekel.

Characteristics of the Israeli Shekel

Characteristics
Names & Nicknames Shekel, New Shekel, New Israeli Shekel, Sheqel, Agora. Plurals: Shekels, Sheqalim, Agoras, Agorot
Symbols & abbreviations ₪, ש״ח, ILS, NIS
1 ILS One shekel is divided into 100 agora.
ILS coins There are 10 and 50 agora coins (the latter is known as a ½ shekel), as well as coins of 1, 2, 5 and 10 shekels. Coins worth 1 and 5 agora used to exist, but are no longer in circulation.
ILS banknotes NIS 20, 50, 100 and 200 notes are available. 50 and 100 are the most common. NIS 200 is a lot of cash - upwards of US$ 50 - so it can be hard to get change on small purchases.

Although the 1 and 5 agora coins aren’t in use any more, you may still come across bills for irregular prices - ILS 8.99 or ILS 12.02, for instance. If you’re paying in cash, you can simply round the figure up or down, whichever is closer, to the nearest 10.

You might be able to pay in foreign currencies such as US dollars or euros, particularly in popular tourist spots. US dollars are the most welcome foreign currency. However, the exchange rate won’t work in your favour. And in a restaurant or shop, you’ll probably get your change in shekels regardless of what currency you’ve paid in. Best to stick to shekels if you can.

Tourists can claim a tax refund

If you’re a tourist, you can claim VAT back on things you buy when you leave Israel. There are various caveats - you’ll need to have spent over NIS 400, it doesn’t include food or drink except alcohol bought in certain places, and you can’t open packaging before getting the refund. However, if you fit the profile, make sure to find one of the registered VAT refund offices at major airports, ports or border crossings when you’re on your way out. VAT is 17%, so it’s worth the effort if you’re looking to save on costs.

What should I know about exchanging money in Israel?

Find an exchange service that offers you fair rates

Currency exchange shops

If you’re in a major city like Jerusalem, you’ll find a lot of private exchange offices - small specialist shops that will exchange your money for you. Though they are advertised to be commission-free, the exchange rates offered can sometimes be surprisingly poor. Take a look at a few different places to compare rates before you pick one. If you already have cash in hand and need to exchange it, this is generally the best option.

Post offices advertise commission-free exchange too, though you still need to watch out for the poor exchange rates as it’ll still cost you. Not to mention, you might be faced with long queues if you’re in a busy area.

Exchanging money in banks

If you exchange money in a bank, you’ll be charged a fixed fee - although you might get a better rate than in an exchange office. Banks are open on Sundays but not Saturdays.

Withdrawing from ATMs

But actually, you’re likely to get a better exchange rate and better overall value if you withdraw money straight from an ATM - in Hebrew, kaspomat - once you’re there. That also means you don’t have to travel with large amounts of cash. More on ATMs later.

Whatever you end up doing, don’t get too taken in by talk of commission-free exchange or zero fees. There’s only one real exchange rate, so if you’re not being offered the same rate you see on Google or on an online currency converter, the service is making money off you - whether they are upfront about it or not.

Rates may well be better in Israel than in your home country

Travelling from major areas like Europe, the US or Australia, you’ll probably find that the best exchange rate is in Israel itself. Check what your bank charges for international transactions, but seriously consider holding off on getting your shekels until you’re there and can use a local ATM.

Ensure your banknotes are valid and damage-free

Try not to end up with banknotes in poor condition. If the bill is falling apart, it might not be accepted. Also, check that your shekels say “New” on them - if it doesn’t specify, you could be looking at the pre-1985 currency, which isn’t valid any more.

Avoid exchanging too much money at the airport or your hotel

The machine or exchange desk at your hotel or airport has you where it wants you - a captive market. That means they give you a bad deal. Only exchange money at these convenient spots if you have no other option.

For the best deal, transfer money to Israel at the mid-market rate

If you have a friend or family member in Israel who has a bank account and is willing to help, you could always send them money via TransferWise, and then collect cash on arrival. That means you’ll be getting a much better exchange rate, up-front costs, and less mess once you get there.

Can I use travellers’ cheques in Israel?

You might well struggle to use travellers’ cheques - or checks if you’re American - in Israel. Banks charge a lot to cash them, and other places might not do so at all. If you do find yourself with some, the post office is your best bet for avoiding hefty commission.

What should I know about using my debit and credit cards in Israel?

You’re unlikely to have trouble using your card in major places in Israel, although you’re better off with cash at a street market. It’s up to your bank whether you pay a foreign transaction fee on credit or debit card purchases and how much it is. Usually you do, so check this with your bank before you head out there.

Also, before you make it to Israel, make sure your PIN has only 4 digits - you could run into problems if it’s any longer. Many card terminals only accept 4 numbers.

Always choose to be charged in the local currency

You might be given a choice, at either an ATM or when you’re paying for your goods, about which currency to be charged in. This is something called “Dynamic Currency Conversion” (DCC) and is billed as a convenient service as it allows you to see the amount - and be charged - in your home currency. Although this may be tempting, you should refuse this offer. Always choose to be charged in the local currency. It’s cheaper that way. Otherwise, by accepting the proposition you give the Israeli card processor the right to give you their own poor exchange rate. Save yourself the headache and the money - choose local.

Don’t forget to tell your home bank you’re going to be travelling

Just like if you travel anywhere else, it’s good practice to let your bank know where you’re going in advance, so that it doesn’t get suspicious about international transactions. You don’t want to end up overseas and stuck without a card to use.

What are the best practices for using ATMs in Israel?

Some Israeli ATMs, kaspomats, have labels on them indicating they accept foreign cards and should have instructions in English. They’re very common in cities but inevitably less so in smaller places. Which means you’ll need to plan strategically if you’re heading out of town. If an ATM doesn’t work with your card, it’s worth trying a couple more as services can vary from bank to bank.

Want to check where to go? You can locate your local ATM via these tools:

Visa ATM locator
MasterCard ATM locator
Amex ATM locator

You may have to pay a fee to the bank whose ATM you use, too, albeit a small one. And there might also be a limit on the amount you can withdraw - this depends on your bank, and the machine.

As mentioned previously, if you’re in Israel, always choose to be charged in Shekels, not your home currency. Otherwise, the exchange rate you get will be quite low, and will cost much more than you bargained for.

What are the major banks in Israel?

Israel’s top five banks have about 90% of the market, and the top two - Hapoalim and Leumi - have 60% between them. A few international banks do operate, but if you’re after a normal personal account, one of the Israeli providers is the way to go. The international banks listed below mainly cater to businesses rather than individuals.

Your bank might have a partnership with an Israeli bank. Check with your bank about this, as it could save you some money in transaction costs if you use their ATMs.

Most common retail banks in Israel

· Hapoalim
· Leumi
· Discount Bank (Mercantile)
· Mizrahi Tefahot
· First International

International banks operating in Israel

· Barclays
· BNP Paribas
· Citibank
· HSBC

If you’re the type to plan ahead on your trip and want the best deal around, try sending your money abroad with TransferWise.

With TransferWise, you can transfer money to a bank account in Israel - your own if you have one, or a friend’s. TransferWise shows all of their fees upfront so you can be sure what you’re being charged. And they use the real mid-market exchange rate - the same one you find on Google. Save yourself the hassle. And the money.

TransferWise is the smart, new way to send money abroad.

Find out more