Interest rates are low, which means that people are borrowing more, and according to statistics compiled by the Pa’amonim non-profit organization, one third of Israelis took loans of some sort last year – three quarters of them from the bank they do business with. The figures came from a poll of a cross-section of 500 Israelis taken on behalf of the organization, which specializes in helping Israelis balance their household budgets and get out of debt.

Nearly 40% of those taking loans did so in order to “close the minus” in their day-to-day accounts – taking a lump sum to get their bank balance out of negative territory, and paying it off as a regular loan. The main motivation for that kind of loan is to pay off debt with less interest; the compounded interest rate on negative bank balances is often over 15% annually, while a regular bank loan can be had for 5% annual interest.

The second most popular loan type was automobile financing, with 18% of those taking a loan doing so in order to buy a car. Three quarters of those taking loans borrowed from banks – often at the suggestion of a bank officer – while 8% took loans from credit card companies and insurance firms, and 7% borrowed from special funds maintained by the companies they work for, unions, etc.

While the terms of a loan can be attractive, said Uriel Landberg, Pa’amonim’s director, it isn’t always the best choice – and for those already in debt, it’s usually the worst choice. “Offers for loans are everywhere, with ads, text messages, and robocalls urging us to mortgage our futures for immediate gratification. For those already in debt, borrowing just puts them on a merry-go-round of interest, debt, and loans that eventually leads to tragedy – bankruptcy, impoverishment, and worse.

“We see this daily in our work with families who are in debt,” he added. “People need to learn to balance their budgets, and that leads to balancing their lives.”