Wednesday, July 04, 2007

On Credit

The Israel banking system is weird right? You get charged too much for doing too little all the time? Okay - hate it or hate it, we all accept that for the meantime anyway, we pay a lot and get little in return.

Here's an American experience from yesterday which may change perspectives.

About a couple of months ago, I applied for a credit card through my bank. There's this thing called a credit rating system in the States which basically means that if you pay your bills on time your rating goes up and if you default and pass bad cheques it goes down. A newcomer to the US has neither a good rating, nor a bad one and therefore in order to get a credit card takes some time - in the meantime we have a debit card which works just fine but takes a little more organisation with regards to how much to keep available and how much to have earning interest.

So anyhow, my request for a credit card was turned down as I haven't got enough of a history - the fact that I get a reasonable wage paid into the account every month is seemingly not enough.
So I sat with the bank yesterday and asked them if they could give me a card with a limited line of credit instead. The answer was as follows - I'm going to break it up into very simple chunks.

"No we can't give you a card (despite the fact that now Mrs G also has a healthy salary going into the account)

What you can do however is to put $4000 into a CD (a pikadon) for 12 months.

Against that collateral, we will lend you $4000.

You can then repay the $4000 on a monthly basis.

After 12 months of seeing that you pay this money back, we'll consider giving you a credit card."

Now yesterday was a fast day and I figured that maybe a lack of water had left me dizzy. So she explained it again. In order to get a credit card, I need to take a loan?! :P

I looked at her like she was on crack. She apologised, saying that she also considered it absurd. I thanked her and left.

Anyone who tells you the Israeli banking system is weird - tell them that the American one is a lot weirder (for a newcomer anyway).

I'm keeping my money under the mattress.



lisoosh said...

If you happen to look at this comment -

We had the same problem, although found an Israeli "international" credit card helped to build credit, even without using it.
There is also a system whereby you "buy" a certain amount of credit, you give them say $2000 (once) to be put in a fund, then you have a secured $2000 credit line. As they see you make regular payments against your balance when you use the card, you will develop a credit rating.

It is very frustrating though.

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