Low-Risk Savings: The Basics
Not all savings need to be invested in volatile markets. For emergency funds, near-term goals, or simply money you cannot afford to risk, low-risk savings options are essential. Israel offers two main categories: bank fixed deposits (pikdonot) and government savings bonds (mamlachtiot). Both provide a fixed interest rate without exposure to equity-market volatility, though credit and inflation risk still apply.
What is a bank fixed deposit (pikadon) in Israel?
A פיקדון בנקאי (Pikdon Bankai) is a term deposit where you lock your money with a bank for a set period - typically 1 month to 5 years - in exchange for a guaranteed ריבית (Ribit) (interest rate). The rate is fixed at the time of deposit and does not fluctuate with the market.
In a high interest rate environment (which Israel has experienced since 2022), pikdonot became significantly more attractive. As of early 2025, short-term shekel deposits were offering 4-5% annualized rates at major banks - considerably better than the near-zero rates of the 2010s.
Key terms to understand:
- Term (tekufa): The lock-up period - 1 month, 3 months, 6 months, 1 year, or longer. Longer terms sometimes offer better rates, but you lose flexibility.
- Early redemption: Breaking a pikadon early typically incurs a penalty - usually forfeiting some or all of the accrued interest. Some banks offer "flexible" or "daily" pikdonot that allow early exit with a small rate reduction.
- Renewal: Most banks auto-renew pikdonot at maturity at the prevailing rate. Set a calendar reminder to review at maturity - rates change.
- Tax: Interest earned is subject to 15% withholding tax (nikui bamakor), which the bank deducts automatically. No separate filing needed for simple bank interest.
How do you compare pikadon rates and negotiate a better one?
Published rates at major banks are typically not the best available. Particularly for deposits above 50,000-100,000 NIS, banks will often offer improved rates to retain the business. Call or visit the branch and ask specifically: "What is your best rate for a [term] pikadon on [amount]?"
Online banks and postal bank (DO'AR Israel / Postal Bank) sometimes offer better rates than the traditional banks, particularly for standardized short-term deposits. Compare before committing.
Gemel Yeladim: Children's Savings Account
Every child born in Israel - or who made aliyah as a child - receives a government savings account called גמל ילדים (Gemel Yeladim). This is also known as "Chalon Hayeled" (the Child's Window) or the National Insurance children's savings plan.
How it works:
- Government contribution: Bituach Leumi deposits 58 NIS per month for every eligible child automatically (2026 figure; the amount is CPI-indexed and started at 50 NIS when the program launched in 2017)
- Parent top-up option: Parents can double the deposit by diverting an equal 58 NIS per month from their cash child allowance (Kitzvat Yeladim) into the account, bringing the total to 116 NIS per month. There is no separate government match on top of this; the extra 58 NIS comes out of the allowance you would otherwise receive in cash
- Investment: Contributions are held in a Kupat Gemel managed by the selected fund manager. Parents choose the investment track (or accept the default moderate track).
- Access: The account matures at age 18. The child can withdraw the balance, keep it invested, or roll it into other savings vehicles.
- Tax treatment: Growth is tax-advantaged similar to other provident funds.
How do you maximize your child's Gemel Yeladim account?
The parent top-up doubles the monthly amount being saved - from 58 NIS to 116 NIS per month - at the cost of redirecting an equal 58 NIS from the cash child allowance into the locked savings account. It is not free money or a matched contribution; it is a choice between receiving that 58 NIS as cash now or having it invested until the child turns 18.
Over 18 years at a moderate 5% annual return, the base government contribution alone (58 NIS/ month for 216 months) grows to roughly 20,000 NIS with no parent action at all. With the top-up doubling the monthly deposit to 116 NIS, the balance at 18 reaches approximately 40,000 NIS - a meaningful start to a young adult's financial life.
To activate the top-up and choose your preferred fund manager, contact Bituach Leumi with your child's details and your chosen fund manager's information. The default fund manager and track are assigned automatically - but like all Israeli savings products, choosing a low-fee manager is worth the one-time administrative effort.
An Israeli pikadon is a bank term deposit that pays a fixed interest rate (roughly 4-5% on short-term shekel deposits in the high-rate period since 2022) rather than tracking the markets, and interest is taxed at 15% withheld at source. Gemel Yeladim is a separate government savings account opened automatically for every child: as of 2026 Bituach Leumi deposits NIS 58 per month per child (CPI-indexed, up from the NIS 50 launch level in 2017). Parents can double the monthly deposit to NIS 116 by diverting an equal NIS 58 from their cash child allowance into the account; there is no separate government match. The account becomes available as a lump sum at age 18.
In the high interest rate environment since 2022, short-term shekel pikdonot at major banks offered roughly 4-5% annualized as of early 2025, compared with near-zero rates in the 2010s. The rate is fixed at the time of deposit. Published rates are often not the best available, and banks frequently offer improved rates on larger balances.
Interest is subject to a 15% withholding tax (nikui bamakor) that the bank deducts automatically at source. No separate filing is needed for simple bank interest. US taxpayers should note Israeli bank balances are reportable on FBAR above 10,000 dollars and the interest is reportable on a US return.
As of 2026, Bituach Leumi deposits NIS 58 per month per eligible child automatically. The amount is indexed to the Consumer Price Index and has risen from the NIS 50 level when the program launched in 2017 (it was frozen at NIS 57 for 2025). This base deposit happens regardless of family income or whether parents take any action.
No. There is no separate government match. The top-up doubles the monthly deposit from NIS 58 to NIS 116 by diverting an equal NIS 58 from your cash child allowance (Kitzvat Yeladim) into the savings account. The trade-off is receiving that NIS 58 as cash now versus having it invested and locked until the child turns 18.
The account becomes available as a lump sum when the child turns 18. At that point the balance can be withdrawn, left invested, or rolled into another savings vehicle. Because the horizon is long, an equity-heavy investment track gives growth more time to compound, while a child close to 18 may suit a more conservative track.
