An American in Israel, Navigating Credit
My brother and I have been standing in line—we are the line—for 10 minutes while the man in front of us sets up his payments for four otter pops and one sucker.
He is paying with Tashlumim. Real old-fashioned credit. There are tons of little stores like this all over the country—single owner, providing a few blocks with 16-, 20- or 24-hour access to fundamental groceries: bread, hummus, milk, cottage cheese. And yes, otter pops and suckers. These stores are neighborhood institutions, neighbors helping neighbors. Hence the Tashlumim.
After it’s been settled, with a “Shabbat shalom, hamud,” we’re up. we pay for our chocolate milk with cash, but we don’t have to.
I grew up in the United States, where revolving credit is the norm. Revolving credit as a functional financial tool only took off in the 1940s, and by the time I’d arrived to college and had to navigate whether or not to get a student card, the concept was pervasive. In fact, I’d never considered a world in which such standards of lending didn’t exist. Being behind on payments, having absurd interest rates—those were the rules of the credit game.
It took me a while to get a student credit card, and then I got a second one. I often used up all of my available credit every month, but then I made sure to pay it down immediately. I’m not sure why I didn’t just use the money in column b for column a in the first place. I guess it just wasn’t how it was done.
I have lived in Jerusalem for a year. My checking account comes with a “credit card.” In Hebrew it’s called כרטיס אשראי (cartis ashrai, lit. card of permission, or trust—Hebrew’s a pretty compact language.) I use the card to make purchases, and the full balance of the card is deducted from my account each month. There are no minimum payments. The minimum is the balance. To determine the balance I was given each month, a banker looked at my income and did some funny math in her head and gave me a “frame” of 2000 shekels ($500). Every month I have 2000 shekel with which to pay, and on the 2nd of the month, my bank account is debited by the card issuer, and we start over again.
My frame is low. People who make real money, or live in two-income households, have HUGE frames. I’ve heard of people with 60,000 shekel frames. It’s acceptable to go into minus here—how much into the minus they let you go is another number determined by your banker—but people don’t think of it as carrying debt, even though there is interest charged. (Though I found it impossible to discern from my statements what that interest rate is.)
The best part of the Israeli banking system though, is Tashlumim, or payments. You can put anything on installments. The price might increase by a hundred shekel, or your bank/card issuer might charge you 50 shekel to do this, but then you can divide the price across as many months as they’ll let you! At the furniture store, this is a pretty good deal—interest-free credit, guaranteed to be paid every month with your monthly cartis ashrai bill. But it’s available everywhere—the corner shops, grocery stores. You can pay for your bread and cheese in three payments. And maybe people do.
It turns out a lot of Israelis need that, and I’m turning out to be one of them. Between the monthly living stipend I get from my school and money I take out of savings each month, I’m living off of 1.5 times the minimum wage. I run out of cash on hand about three days into the month, between paying rent and bills, like my cell phone, and of course, my cartis ashrai bill. But even with no cash, I still have that 2000 shekel to get me through … until next month when I can start it all over again.
The thing about Tashlumim is that it seems really weird. But it’s just installment credit. Forever, basically, before airlines and/or department stores invented revolving credit with banks, people received installment credit from the local pub, from the king, from whomever. In good hands it’s a very stable and safe way for everyone to benefit—I know what I’ll get for my meal or my work; you know that I’ll pay up. In America, revolving credit has ruined lives. But here it seems to work.
My first Tashlumim payment was to the gym. I wanted to join, but I did not have the 1200 shekel upfront. So I signed up to make four payments of 300 each month. I did the paperwork, and for the next four months, 300 shekel were taken out of my account at the beginning of the month. It felt just like how we’re used to doing that sort of thing in America.
Until I ran out of credit a week and a half later. Though only 300 of the 1200 would be debited from my bank account that month, the Tashlumin “blacked out” the full amount of the membership on my card. I started at 2000 and then “bought” 1200 shekel worth of gym time. I had thought I would only be on the hook for 300 that month—and I was. But the full amount was deducted from my available credit. The next month, 900 was still blacked out, then 600, and then 300. This month I made my final Tashlumim payment. Now I’m free.
Tashlumim is a way to pay for things when you don’t have the money. But it also seems really silly to me. Nobody benefits from the money sitting there. The bank isn’t charging me interest, because I’m not outstanding. I’m not getting to use all of my available credit, because I sort of am outstanding. The gym doesn’t get paid fully for four months. Many Israelis use Tashlumim for everything. I tried it once, and now I’m sticking with only buying what I can pay for. It may not be very American of me, but it feels good.
Abraham Benson-Goldberg lives in Jerusalem. Image by sgmerle