The landlord said the word and now you are at your bank’s counter, or staring at the bank’s app, being asked to lock up thousands of shekels you cannot touch for a year. A bank guarantee feels heavier than it is, partly because nobody explains where the money goes, what it costs you, or how you get it back. This page follows one guarantee from the moment you ask for it to the day the freeze lifts, with the real fee at each bank, the legal limit on the size, and the only conditions under which a landlord can ever cash it.
What you are actually signing your bank up for
An arvut bankait is a one-page promise from your bank to your landlord. The bank says: if this tenant owes money under the lease and does not pay, present this document and we will pay you, up to the stated amount, on demand. The promise is irrevocable (the bank cannot take it back once issued) and on-demand (the bank pays when the landlord presents it in time, without asking who is right). To the landlord it is as good as cash, which is exactly why landlords like it.
Two features make it behave differently from the other ways renters secure a lease. First, the bank does not judge your dispute. If the landlord presents a valid guarantee, the bank pays and steps aside; any fight about whether the landlord was entitled happens afterward, between you and the landlord. Second, it only ends two ways: it reaches its written expiry date, or the paper itself is physically returned to the bank. Until one of those happens, your money stays locked.
This page owns the bank-instrument side of renting. The wider question of how much total security a landlord may take, and the menu of cash, checks, and guarantors, lives on the rental security deposit page. If your landlord asked for paper checks instead, see post-dated and security checks; if they want people to co-sign, see rental guarantors (arevim).
How the bank sets it up, step by step
The process is short and you drive most of it. You apply at your branch or through digital banking and give the bank two things: the guarantee amount and the beneficiary’s name, which is the landlord exactly as written in the lease. The bank then needs collateral, and here the route splits.
- Deposit-backed (the normal route for rent). The bank requires the full guarantee sum to already be sitting in your account and freezes it. As long as the guarantee is live, that money is set aside and you cannot spend it. The bank takes no risk, so this route is the cheap one. Almost every rental guarantee works this way.
- Non-deposit-backed (credit route). Instead of freezing your cash, the bank lends you the backing and carries the risk itself. That needs a credit check and costs far more, around 5% to 6% of the amount, with a minimum near NIS 400 to 620. The February 2025 reform did not lower this route. Most renters never use it.
Get the wording right while you set it up. The guarantee should name your specific lease, should be non-assignable (so the landlord cannot pass it to someone else), and its validity should run to the end of the lease plus a short tail. The amount must obey the legal cap below, so do not let a landlord write a bigger number into the request than the law allows.
What it costs: the fee after the 2025 reform
For years the deposit-backed fee was a percentage of the guarantee, roughly 1.8% to 2.9% (the Bank of Israel described it as about 2% to 2.5%), with a floor around NIS 250 to 350. On a large guarantee that percentage stung.
From February 2025 the Bank of Israel switched the deposit-backed fee on a residential rental guarantee of NIS 50,000 or less from a percentage to a flat per-guarantee charge. The regulator priced rental guarantees below general ones on the view that they are simpler to run. The reported saving was roughly NIS 280 to 500 per guarantee compared with the old percentage, using a worked example of a NIS 30,000 guarantee on a NIS 10,000 rent.
Here is what the banks set, as reported at the time. Treat these as a guide and confirm the live number on each bank’s tariff sheet (lo’ach amalot) or the Bank of Israel fee-comparison tool, because tariffs change.
| Bank | Flat fee, rental guarantee up to NIS 50,000 |
|---|---|
| Bank Discount | about NIS 250 |
| Bank Leumi | about NIS 330 |
| Mizrahi-Tefahot | about NIS 330 |
| Bank Hapoalim | about NIS 400 |
| First International (Beinleumi) | about NIS 410 |
| One Zero (digital) | free for premium members |
Above NIS 50,000, or for a non-rental purpose, you fall into a higher tier (for example Discount about NIS 300, Mizrahi-Tefahot about NIS 490). Since the legal cap on a rental guarantee is three months’ rent, almost every renter stays under NIS 50,000 and gets the lower flat fee. The flat-fee figure is a recent change, so verify it before you budget.
The hidden cost: money you cannot use
The fee is not the whole price. The bigger cost is quiet: the bank freezes the full guarantee in your account for the whole lease, so that money cannot work for you. Economists call that an opportunity cost, and it is easy to put a number on.
Here is the first figure, built only from the legal cap, a published rent, and the Bank of Israel policy rate as a stand-in for what frozen money could otherwise earn.
Basis: guarantee amount equals three months’ rent (the binding cap on a 12-month lease). Frozen money would otherwise earn around the Bank of Israel policy rate, taken here as roughly 3.75% (a conservative proxy; a blocked deposit often pays near or a little below this, and the exact rate moves, so confirm the current one). Flat fee NIS 250 to 410. All-in yearly cost equals the flat fee plus one year of lost earnings on the frozen sum. Rents are CBS averages for Q2 2025.
| Monthly rent | Frozen (3 months) | Lost earnings per year (about 3.75%) | All-in yearly cost (fee + lost earnings) |
|---|---|---|---|
| National average, NIS 4,879 | NIS 14,637 | about NIS 549 | about NIS 799 to 959 |
| Tel Aviv average, NIS 7,155 | NIS 21,465 | about NIS 805 | about NIS 1,055 to 1,215 |
| Northern district, NIS 3,120 | NIS 9,360 | about NIS 351 | about NIS 601 to 761 |
| Round example, NIS 6,000 | NIS 18,000 | about NIS 675 | about NIS 925 to 1,085 |
The lesson is that the flat fee is the small part. On a NIS 6,000 rent the fee is at most NIS 410, but the lost earnings on NIS 18,000 of frozen money run about NIS 675 a year. These are my own figures from the cap and an assumed earnings rate, not bank quotes, and your real lost-earnings number depends on what your own account would have paid. If your blocked deposit still earns interest, your true cost drops close to the fee alone.
Guarantee versus cash deposit: where your money sits
Renters often weigh a bank guarantee against simply handing the landlord cash. The amount frozen is the same (the law caps both), but the difference is who holds it and whether it earns anything for you.
With a cash deposit, the money leaves your account entirely and sits in the landlord’s hands for the lease plus the return window, usually with no interest paid back to you. With a bank guarantee, the same sum stays in your own blocked account, where a deposit may still earn a modest rate, and you pay the flat fee instead.
Here is the second figure: how much it costs you to have the money tied up over a typical lease, comparing the two.
Basis: three months’ rent frozen, tied up for about 14 months (a 12-month lease plus up to a 60-day return window). Opportunity cost figured at the roughly 3.75% proxy rate. Cash-deposit case assumes the landlord pays you nothing on the held cash; guarantee case assumes your blocked deposit still earns near that rate, so your real out-of-pocket is mainly the flat fee. Rents are CBS averages for Q2 2025.
| Monthly rent | Sum tied up (3 months) | Cash deposit: your cost over ~14 months | Bank guarantee: your cost |
|---|---|---|---|
| National average, NIS 4,879 | NIS 14,637 | about NIS 640 (earns you nothing) | about NIS 250 to 410 (the fee) |
| Tel Aviv average, NIS 7,155 | NIS 21,465 | about NIS 939 (earns you nothing) | about NIS 250 to 410 (the fee) |
| Round example, NIS 6,000 | NIS 18,000 | about NIS 788 (earns you nothing) | about NIS 250 to 410 (the fee) |
Read it plainly: on a NIS 6,000 rent, parking the cash with a landlord for fourteen months quietly costs you around NIS 788 in earnings you never see, while the guarantee keeps the money in your name and costs you mainly the NIS 250 to 410 fee. That is the practical case for a guarantee over cash, as long as your blocked account actually earns something. These are computed figures, not official ones, and the result flips if your blocked deposit pays nothing and the fee is high.
The legal ceiling on the amount
You do not have to accept any number the landlord names. The Fair Rental Law caps the total security, and the cap explicitly covers bank guarantees, not just cash. The limit is the lower of one third of the total rent over the lease, or three months’ rent.
The math resolves cleanly by lease length. On any lease of nine months or longer, three months’ rent is always the smaller number, so it binds. On a NIS 6,000 rent that is NIS 18,000. For a shorter lease, the one-third rule bites instead. The cap applies to residential leases of at least three months where the rent is under NIS 20,000 a month, and it does not cover hotels, dorms, or protected and institutional housing.
One correction worth carrying with you: the binding figure is the lower of one third or three months. Some sources float a “six months” figure for guarantees. That is wrong for a residential rental under this law. If a landlord demands six months as a guarantee, point to the cap. The full set of tenant protections this 2017 law creates sits on the fair rent law protections page.
When the landlord is allowed to call it
This is the part that scares renters and the part most landlords get wrong. The guarantee is on-demand toward the bank, but the lease and the law decide when the landlord is actually entitled to demand. Two different rulebooks apply at once.
The grounds are narrow. A landlord may realize the guarantee only for a real, named debt: unpaid rent, unpaid ongoing charges you owed, or damage you caused and did not repair. And the call is capped at the actual debt, not the whole guarantee. If you owe NIS 2,000 in damage, the landlord takes NIS 2,000, not the full NIS 18,000.
There is also a gate before the gate. For a rental guarantee, the landlord must give you advance notice with a reasonable time to fix the default before depositing the guarantee. You get a chance to cure. The bank will pay on a valid presentation without examining your side, but if the landlord skipped the notice-and-cure step or had no real debt, you can pursue them afterward to claw the money back.
So protect yourself in the lease wording, not just at the bank. Push for a clause that requires written notice and a cure period before the landlord may realize the guarantee, keep the guarantee non-assignable, and make it reference the exact rental contract. Those three lines turn an on-demand instrument into one the landlord cannot trigger casually.
Expiry, renewal, and getting your money unblocked
Your frozen cash comes back through one of two doors, and only those two: the guarantee reaches its expiry date, or the guarantee document is returned to the bank. Nothing else lifts the freeze. That single fact shapes everything you should do at move-out.
Set the validity window correctly at the start. The guarantee should cover the entire lease, ideally with a short tail of one to two months beyond the end date, so it does not lapse mid-dispute. It does not renew itself. If you extend or renew the lease, you must explicitly update the guarantee, by signing an extension appendix or issuing a fresh guarantee letter. A lease renewal with a stale guarantee is a common, avoidable mess.
At the end, the landlord has a duty to return the guarantee document to you within 60 days, counted from the later of two events: the day you vacate, or the day your debts are fully settled. Until that paper is back and the bank releases the block, your money stays frozen and the lost-earnings clock keeps ticking. So the move that ends your cost is simple and entirely in your hands: chase the document back the moment you have left and cleared any debt, then take it to the bank to lift the freeze. For the wider playbook on prying your security back from a slow landlord, see what to do when a deposit is not returned.
The choice, before you walk into the bank
If you have a say in which instrument to use, this is the trade-off in one table.
| If you care most about… | Lean toward | Why |
|---|---|---|
| Keeping the money in your own name | Bank guarantee | The frozen sum stays in your account and may still earn interest; you only pay the fee. |
| Avoiding any bank fee | Cash deposit or checks | No issuance fee, but the cash leaves your hands and usually earns you nothing. |
| The landlord accepting it easily | Bank guarantee | It is treated as equivalent to cash, so most landlords prefer it. |
| Not freezing a large sum at all | Guarantors or a security check | These secure the lease without locking your cash, though landlords trust them less. |
Run this before you sign the request
- Confirm the amount obeys the cap: on a lease of nine months or more it is three months’ rent, no higher.
- Ask your bank for the flat rental fee in writing and compare it against another bank’s tariff sheet; the gap can be NIS 150 or more.
- Make sure the route is deposit-backed, not the costly credit route, unless you genuinely lack the cash to freeze.
- Check the beneficiary name matches the landlord on the lease exactly, and that the guarantee names your specific contract.
- Set the validity to the lease end plus one to two months, and confirm it is non-assignable.
- Get a lease clause requiring written notice and a cure period before the landlord can call it.
- Diarize the 60-day return rule for move-out, and plan to retrieve the document fast to stop your money sitting frozen.
A few terms, once
- Arvut bankait: the bank guarantee, a bank’s on-demand promise to pay the landlord up to a set amount.
- Deposit-backed: the bank freezes your own cash as collateral, so the fee is low.
- On-demand: the bank pays a valid presentation without judging the dispute.
- Non-assignable: the guarantee cannot be transferred to anyone other than the named landlord.
- Lo’ach amalot: a bank’s published fee schedule, where you confirm the current charge.
Questions renters with a bank guarantee ask
How much will the guarantee actually cost me?
Two parts. A flat issuance fee of roughly NIS 250 to 410 for a deposit-backed rental guarantee, plus the lost earnings on the frozen money. On a NIS 6,000 rent the all-in is about NIS 925 to 1,085 for the year, and most of that is the lost earnings, not the fee. If your blocked deposit still pays interest, your real cost falls toward the fee alone.
Can the landlord just take the whole guarantee if we argue?
No. The landlord can realize it only for a real debt (unpaid rent, unpaid charges, or unrepaired damage you caused), only up to that debt amount, and only after warning you and giving you a reasonable time to fix it. The bank will pay a valid presentation without judging, but if the landlord had no real claim you can pursue them to get the money back.
How big can the guarantee be?
The lower of one third of the total lease rent or three months’ rent. On any lease of nine months or longer that is three months’ rent. A demand for six months is not lawful for a residential rental under the Fair Rental Law.
The bank froze my money. When do I get it back?
When the guarantee expires, or when the document is returned to the bank and the block is lifted. Those are the only two triggers. The landlord must hand the document back within 60 days of you leaving and settling any debts, so retrieve it promptly to end the freeze.
We renewed the lease. Does the guarantee carry over?
Not automatically. It only covers the term and validity written into it. To extend, sign an appendix or issue a new guarantee letter; otherwise it can lapse while you are still living there, or stay frozen past when it should have ended.
Is a guarantee better than just giving cash?
Usually, if your blocked account earns interest. The same sum is frozen either way, but a guarantee keeps the money in your name (where it can still earn) and costs mainly the flat fee, while cash handed to a landlord typically earns you nothing for the fourteen-odd months it is held.
Sources
- Kol Zchut, bank guarantee (arvut bankait) concept and rental rules
- Kol Zchut, limit on rental security amount (Rental and Loan Law sec. 25yod)
- Calcalist, Bank of Israel reform of bank-guarantee fees (per-bank flat fees, Feb 2025)
- Nefesh B’Nefesh, Renting in Israel (guarantee mechanics and 60-day return)
- Bank of Israel, monetary policy press release, 25 May 2026 (policy rate 3.75%)
- Central Bureau of Statistics rent averages, reported via Ynetnews
Do this next
Phone or message your bank and ask one question: what is the flat fee for a deposit-backed residential rental guarantee, and confirm it in writing. Then check the amount the landlord asked for against the cap (three months’ rent on a normal lease), and make sure the lease gives you written notice and a cure period before the guarantee can be called. When the instrument is settled, slot it into the full move-in budget on the rental security deposit page, line your contract up against the lease contract checklist, and browse current homes on the for-rent hub.
