Protecting your pocket: financial tips to save during the war

Try to avoid freezing mortgages and loans - these days the banks offer options for deferring and freezing loans and mortgages for a few months which may be tempting in such a period of economic uncertainty. But such a postponement has meanings and in practice the meaning of the mortgage postponement is taking a loan in the amount that was postponed.

For example, if the mortgage repayments amount to NIS 6,000 per month, a 3-month postponement means taking a loan of NIS 18,000. It is important to check with the bank whether that "new loan" involves paying interest? What is its repayment period and what is the amount of the future monthly repayment.

As long as the household's income has not been affected or there are savings and safety cushions, you should consider using them and avoid as much as possible the postponement of loans that will make future repayments more expensive.

Beware of installment transactions - when revenues are down and there is uncertainty, the temptation to split transactions into installments increases. It is important to pay attention to whether the division into payments involves the payment of interest, which will usually be very high (double-digit interest) and lead to a significant increase in the price of the product or service. In a situation where there is no choice, it is better to consider taking a one-time loan for the purchase of the product or service and save on the high financing costs of dividing the transaction into interest-bearing payments.

Create accessible liquidity - the need for liquidity is increasing, but there are solutions that will allow money to continue working. In the last year, the interest rate in the economy increased significantly and attractive savings opportunities were created in the banks. However, in most cases, the customers were required to "lock up" the money for a period of a year or more in order to benefit from the high interest rates.

Today more than ever it is important that the money be available due to the lack of forward admissions. So how is it possible to save and prevent the money from being eroded in the back and forth? There are two main and solid alternatives today. The first is a bank deposit with daily or weekly liquidity. Today, some banks offer attractive interest rates even on deposits with high liquidity.

The meaning of liquidity is that you can withdraw the money every day or every week without paying a penalty and while receiving the full interest accrued after tax deduction. It is important to note that there are no small letters and that the full interest is really received at the time of withdrawal.

At ONE ZERO Bank, for example, they offer a daily deposit with an interest rate of 4%, which can be withdrawn every business day. Thus, on an amount of NIS 50,000, you can receive an interest of NIS 2,000 before tax after one year. The deposit is only available to customers of the bank's premium route, which charges a monthly payment of NIS 49, but the high interest rate may offset the entire monthly payment compared to alternatives.

Another alternative is a financial fund that can be purchased as a security. The fund invests in bank deposits and short-term government bonds. It offers a relatively high interest rate and you can sell the fund units every day. It is important to note that the taxation of a cash fund and a bank deposit is different. A cash fund is subject to the taxation of a security - 25% of the real profit (minus inflation) and a deposit is subject to the taxation of 15% of the nominal profit. In any case, before choosing a deposit or a financial fund, it is worth checking and comparing alternatives between the banks.

Pay attention to foreign exchange fees - in recent weeks the dollar exchange rate has experienced sharp volatility amid a lack of recognition and the fear of an escalation in the northern sector. The dollar jumped against the shekel and many began to wonder if it was wrong to purchase dollars to protect the erosion of the local currency. But a few weeks later, when they started Estimates that the northern front is calming down, the dollar has weakened a lot and almost returned to its pre-war level.

Buying foreign currency involves quite a bit of speculation and high risk. Therefore, before purchasing dollars or other currencies, you should examine whether you need them - for example, for a trip abroad or if it is an investment tool, then it is recommended to consult with investment advisors. In addition, it is important to note that purchasing foreign exchange involves high and expensive fees.

The purchase of foreign exchange includes a direct commission of around 0.2%-0.3% of the purchase amount (as well as a minimum commission) as well as an indirect commission that is reflected in the purchase/sale rate which is known in professional parlance as the "conversion margin" which can reach up to an additional 1% of the transaction amount. For example A purchase of 50 thousand dollars may involve a fee of 65 dollars. A significant part of this fee can be saved by checking and negotiating with the banks.

Warning before going into the red - these days the state is leading grants and compensations to the public who were financially harmed by the fighting events. However, these grants do not always arrive on time and there may be a flow gap that can put the household in a temporary deficit in the account.

It is very important to make sure with the bank that the account has a current account limit that allows going into the red at all, since entering a negative balance in the account without a limit may damage the credit rating and make it difficult to take out loans in the future and of course involves a very high interest rate. Even if there is a limit in the account, going into the red within the limit involves interest high and usually double digits.

It is recommended to contact the bank and ask to receive notifications of a predicted negative entry in the account in order to prepare accordingly and try to avoid it (such as withdrawing funds from savings or transferring money from another account) and in any case be aware that a negative is an expensive and uneconomical loan that you should do everything to avoid.