‘Restriction’ signal on credit card spending: What awaits citizens?

After the Central Bank of the Republic of Turkey (CBRT) increased the policy interest rate to 45 percent, a slowdown was observed in loans, while credit card expenditures continued to increase.

While the credit card contract interest rate is 3.66, the default interest is 3.96. For cash withdrawal and overdraft debts, the contractual interest is 4.42 and the delay interest is 4.72. Despite high interest rates, the increase in citizens’ expenditures attracts attention.

While credit card debts have increased 2.5 times in the last year, reaching up to 1.2 trillion liras, expectations regarding the future of regulation on credit cards have also begun to increase.

It has been stated for a long time that some regulations could be implemented by the economic management to prevent consumption demand from increasing inflation.

FIRST MESSAGE FROM THE NEW PRESIDENT

Making a statement at the Inflation Report 2024 Information Meeting, CBRT President Fatih Karahan stated that regulations regarding credit cards are on their agenda.

To the question “Will there be an installment limit on credit cards?”, Karahan said, “There was an increase in credit card expenditures in December. We noted this, we are aware of it. It is not yet clear whether this is temporary or not. It was expected that the minimum wage would increase. For this reason, some expenses may have been brought forward, but “Regardless of this, we think credit cards should be regulated. We have a few ideas on this issue, our work continues. We will share it with the public when it reaches a certain stage.”

CREDIT CARD ISSUE FROM ŞİMŞEK

Minister of Treasury and Finance Mehmet Şimşek had previously given the regulatory signal for credit cards. Şimşek said, “We will reduce credit growth not only by increasing the interest rates on credit cards, personal loans, vehicle loans and second home loans, but also by cutting the appetite for lending through banks. You cannot become rich with someone else’s money, loans or cards.”

PRESIDENT OF THE BANKING ASSOCIATION MADE A CALL

Alpaslan Çakar, Chairman of the Board of Directors of the Banks Association of Turkey (TBB), also called for regulation of credit cards in his recent statements. Çakar also particularly drew attention to the growth in credit cards.

Emphasizing that credit card expenditures, whose growth rate reached 177 percent in the middle of the year, decreased to 159 percent at the end of the year, but were still very high, Çakar said that there was a need for a regulation on this issue and that he thought this would come.

Alpaslan Çakar said, “The ways to do this are limiting the person’s spending amount, increasing interest rates or limiting installments. We think that such regulations may come to the agenda in the coming period.”

WHAT WILL BE THE CREDIT CARD RESTRICTIONS?

Speaking to 10 News, Başkent University Faculty Member Prof. Dr. Şenol Babuşcu announced the expected restrictions on credit cards after the elections.

Stating that credit card expenditures are above inflation, Babuşcu said:

“When we look at the usage figures on credit cards, we see that there has been an increase above the inflation rate, even exceeding 100 percent, in the last year. In this context, it may be possible to implement various measures in credit cards. When we look at what these measures might be, our priorities are: Interest rate increase, limit reduction “Measures such as increasing the minimum payment amount, restricting the cash withdrawal amount, reducing/abolishing the number of installments in the current practice are among those that can be implemented in the first place. I think that one or more of them, if not all, will be implemented.”