Despite hundreds of thousands abroad: an all-time record in credit card spending

The Sheba statistics show that despite the hundreds of thousands of Israelis staying abroad, the all-time record for spending on credit was broken in the summer.

The fact that Israelis prefer to spend their money instead of saving it may indicate the ineffectiveness of the interest rate policy employed by the Bank of Israel

Bini Ashkenazi

05/09/2022

Monday, 05 September 2022, 08:32 Updated: 08:57

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Although many Israelis stay abroad, those remaining in Israel broke the all-time record for spending in the summer months (Photo: ShutterStock)

Israelis' spending during the holidays broke records: in the months of July-August, spending on credit cards reached more than NIS 77.674 billion - an increase of 6.1% compared to last year's holidays.

Data from the SBA company, which manages and develops the national credit card payment system, indicate So that the expenses of the Israeli public using credit cards during the July-August 2022 holiday months, set a new record and reached, as mentioned, a total amount of over 77.674 billion shekels, reflecting an increase of 6.1% compared to the summer months of 2021, during which expenses totaling 73.236 were recorded 1 billion shekels.

In July-August 2020, during which there were restrictions on the economy's activity due to the corona virus, the expenses on credit cards amounted to only 63.221 billion shekels. In July-August 2019, the total expenses reached 59.108 billion shekels.

Ronit Tishler Piti, Vice President of Operations and Partner Relations at Sheba (Photo: Public Relations)

Also an increase in online and cash withdrawals

The total amount of expenses in the month of August 2022 reached a record of NIS 38.978 billion.

This is a figure that represents an increase of 5.6% compared to August 2021 in which the total amount of expenses was NIS 36.917 billion.

The amount of daily spending on credit cards also reached a peak in August and for the first time crossed the one and a quarter million shekel mark and was more than 1.257 billion shekels per day.

The previous daily spending record was recorded in July 2022 and was NIS 1.248 billion.

Daily expenses in August were 0.7% higher than in July.

Spending in online transactions recorded an increase of 7.7% in August 2022 compared to last year.

The monthly expenditure in online transactions reached a total of NIS 21.771 billion in August.

In August 2021, the amount of expenses in online transactions reached NIS 20.209 billion.

The amount of daily spending in online transactions in July was NIS 702.297 million and is 2% lower than in July 2022 when the amount of daily spending in online transactions was NIS 716.989 million.

Expenditures in physical transactions in the businesses themselves reached a new record in August and stood at NIS 17.206 billion.

This is an increase of 3% compared to August 2021 in which the total amount of expenses in physical transactions was NIS 16.709 billion.

The average daily expenses in physical transactions amounted to NIS 555.042 million.

This is a figure that represents an increase of 4.5% compared to July 2022 in which the amount of daily expenses in physical transactions was NIS 531.294 million.

An increase of 1.8% was recorded in August 2022 in the volume of cash withdrawals from bank ATMs compared to last year.

The average daily withdrawal amount was NIS 193.779 million compared to NIS 190.268 million in August 2021. In July 2022, the daily cash withdrawal amount was NIS 191.851 million.

: "Traditionally, the months of July - August are record months for the Israeli public's spending on credit cards. We see that spending on credit cards has continued to grow and grow, even though hundreds of thousands of Israelis stayed during the holiday months The biggest abroad.

The month of August was characterized by an increase in spending in physical transactions and they reached an all-time high."

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Governor of the Bank of Israel, Prof. Amir Yaron.

Are the interest rate increases that are not reflected in the reward for savers, pushing us to spend? (Photo: official website, Bank of Israel spokesperson)

The interest rate on the minus is high, so how do we keep spending?

It is difficult to point to a single parameter that will explain the increase in Israeli emigration.

We will try to name two main influencers:

first of course -

A family that consumes exactly the same services during the summer holidays also had to part with a higher amount this year.

But the fact that the increase in spending is even higher than the increase rate of the index plus the natural increase parameter, raises the question of what causes Israelis to spend more, despite the fact that the price of money has become more expensive?

The other reason should turn on a red light at the Bank of Israel: the fact that the banks (despite the improvement in conditions that came after a sharp public-media criticism) grant low interest rates on deposits (mainly on PCM), encourages Israelis to spend.

So for example, a family that might have considered giving up an expensive vacation and thus saving tens of thousands of shekels, does not find a profitable alternative in the form of investing a similar amount in a deposit.

In other words - the Israelis are pushed to spend, even though the interest rate on the "minus" in the bank is very high.

In other words: as far as the Bank of Israel is concerned, it may yet turn out that the interest rate environment levels are rising, the main tool in the Bank's hands in trying to curb inflation, after all, this will only increase - in percentages that will exceed even the lenient targets set for itself by the Bank of Israel (which has already breached the framework of the previous targets).

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• credit cards

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