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Best phone service, credit cards in Israel

What experience have any of you had using AT&T or Verizon cell phones to call back to US while in Israel? Any other options anyone found useful?
For credit cards, I've heard some Visa or MasterCards don't work because they don't have a chip used in some European countries. My AAA agent suggested a pre-loaded type of card which is more universally accepted. You just redeopsit any balance back in your checking account after the trip. Any suggestions about which credit cards do or don't work in Israel?

Thanks for any help.

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    Some European countries use the credit cards with the chip, but Israel does not.
    Our credit cards worked fine there with no problem.
    Capital One credit cards are great for traveling because they have NO foreign transaction fees! We used both Capital One VISA and Master Cards in Israel and Jordan.
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