The basic unit of currency is the New Israel Shekel (NIS).
Exchange counters at Ben Gurion Airport generally offer poor rates of exchange. ATMs give standard rates.
International ATM debit cards will only work at Israeli ATMs specifically marked to accept them. These machines usually have decals for PLUS, Cirrus, Visa, MasterCard, or international flags on them. In Jerusalem and Tel Aviv, these ATMs are easy to find in heavily touristed areas, but in other cities they are few and far between, so stock up on shekels while you can. You can use your credit card to receive cash advances at ATMs. Keep in mind that credit card companies protect themselves from theft by limiting maximum withdrawals outside their home countries, so call your credit card company before you leave home. And keep in mind that you'll pay interest from the moment of your withdrawal, even if you pay your monthly bills on time.
Check with your bank as to whether your card will function in Israel. Note: Remember that many banks impose a fee every time you use a card at another bank's ATM, and that fee can be higher for international transactions than for domestic ones. In addition, the bank from which you withdraw cash may charge its own fee. For international withdrawal fees, ask your bank.
Keeping Flush -- Don't wait until you're down to your last shekel if you're using ATMs to keep yourself funded. International ATM connections sometimes go down, and Israeli banks have a way of having sudden 1-day wildcat strikes. Remember that ATMs will not be restocked during Shabbat, and there's usually a run on ATMs on Friday, so stock up before the Israeli weekend or holidays.
Small Change -- When you change money, ask for some small bills or loose change. Petty cash will come in handy for tipping and public transportation and taxis (Israeli taxi drivers never seem to have change when a foreigner tries to pay). Consider keeping the change separate from your larger bills so that it's readily accessible and you'll be less of a target for theft.
Credit cards are a relatively safe way to carry money. They also provide a convenient record of all your expenses, and they generally offer relatively good exchange rates. You can withdraw cash advances using your credit cards at banks or ATMs, provided you know your PIN. Keep in mind that you'll pay interest from the moment of your withdrawal, even if you pay your monthly bills on time. Also, note that many banks assess a "transaction fee" on all charges you incur abroad (whether you're using the local currency or your native currency).
Note: This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.