Israeli Banks Cut Deposit Interest Rates Offered to Their Customers

SadaNews Economy Translation - Israeli banks began on Wednesday to more sharply reduce the interest rates they offer on deposits, following the earlier publication by the Bank of Israel of data on interest rates for deposits and loans in the banking and financial system for January 2026.

According to the Hebrew economic newspaper Globes, those who closed a shekel deposit for one year in the banks received an average interest rate of 3.95% from the banks, which is the lowest level in the past year and a half. This also led to a relatively sharp monthly decline of 4.17% in the previous month (December 2025).

According to the site, as translated by SadaNews Economy, the Israeli public deposited lower amounts in banks during the mentioned period, with 10.9 billion shekels deposited in banks during January, compared to 11.4 billion shekels in the previous month.

The data from the Bank of Israel indicates a noticeable decline in bank deposits during January, where they reached 38 billion shekels, compared to 43 billion shekels in the previous month. This represents a decline of 5 billion shekels, which may be due to investors turning to the capital market or seeking safer alternative investment opportunities.

Among the five largest banks, customers of Mizrahi Tefahot Bank received the highest interest rate in shekels for deposits of 6 to 12 months in January, at 4.21%, followed by Bank Hapoalim at 4.1%, then Leumi Bank at 3.9%, and then Discount Bank at 3.8%.

Among all banks, One Zero Bank offered the best interest rate for its clients, averaging 5%. Conversely, the bank with the lowest average interest rate was Masad Bank at 3.3%.

According to the Hebrew site, the overall positive current account balance reached 227 billion shekels in January, a slight decline compared to the previous month at 228 billion shekels, indicating that about 4.5% of that balance is computed as interest, with the average interest rate on the positive balance being 2.5%. In contrast, the negative current account balance reached 10.4 billion shekels, with an average interest rate of 11.2%, representing a slight decrease compared to the 11.8% overdraft interest rate in the previous month.

In the credit world, the average interest rate decreased from 8.96% in December to 8.84% in January.

Just a year ago, the average interest rate on loans was 9.3%, which is considered a significant improvement and relief for the Israeli public, as the site mentioned and SadaNews Economy translated.

Among the banks, the highest average interest rate on loans in January was for Jerusalem Bank, at 11.2%, followed by Mercantile Bank of Israel at 9.4%, while the lowest interest rate was for Masad Bank at 7.5%.

Among the five largest banks, Discount Bank imposed the lowest average interest rate at 8.11%, while Hapoalim Bank imposed the highest average at 8.9%. Overall, the volume of loans obtained by the public in January decreased compared to the previous year, from about 6 billion shekels to 5.54 billion shekels.

Among the three credit card companies, Kal was the only one that imposed a double-digit average interest rate in January at 11.27% on loans, while Isracard's rate dropped below a double-digit rate for the first time in over a year and a half to 9.79%.