Turkish banks issued strict warnings to their customers regarding the use of credit cards in specific transactions, such as purchasing gold, foreign currencies, and crypto-assets (Reuters)

Istanbul -

In a proactive step that reflects the growing concern for financial stability and alignment with the strict economic policies pursued by Turkey in light of its economic war on inflation and the decline in the exchange rate of the lira, Turkish banks issued, at the beginning of February, strong warnings to their customers regarding the use of credit cards in transactions. Specific, such as buying gold, foreign currencies and crypto assets, especially those that are not based on “reasonable” justifications.

The Turkish banks' warning comes within the framework of a series of measures aimed at reducing the high inflation rates, which have reached 65% on an annual basis, according to figures from the Turkish Statistical Institute, and enhancing financial discipline. It also indicated the possibility of closing credit cards for customers who violate these policies.

These warnings issued by the banking sector demonstrate a determination to monitor spending via credit cards, and reflect a strict policy against the use of these financial instruments in investment transactions, stressing the essential role of credit cards as a means of meeting the daily and essential needs of consumers.

Worrying numbers

In light of these measures, the Banking Regulatory and Supervision Authority highlighted the significant increase in the use of individual credit cards, amounting to two trillion and 172 billion Turkish liras during the first month of the current year 2024, an increase of 155% compared to the same period last year 2023, in which it amounted to 459. One billion liras.

The volume of use of individual credit cards in Turkey reached 1 trillion and 172 billion Turkish liras during February 2024 (French)

In August 2023, the authority announced that it had stopped the possibility of paying credit card payments in installments for purposes of traveling abroad, such as flights, travel agency fees, and accommodation, with the aim of reducing the exit of foreign currencies from the country, after Turks’ spending abroad reached half The first from last year, 2023, to $3.17 billion, an 84% increase over the same period in 2022.

According to statistics from the Turkish Banking Union, Turkey witnessed a noticeable increase in the number of individuals using personal credit cards during the year 2023, as this number increased by 1.8 million people, bringing the total number of users to 39.3 million people.

The average monthly use of personal credit cards in Turkey was about 63,700 Turkish liras ($2,080).


It is worth noting that the number of individuals against whom legal action was taken, due to personal credit card debts, reached 1.1 million during the same year.

Therefore, there appear to be major challenges facing individuals who have not paid their credit card debts, as their number reached 3 million 836 thousand and 53 people as of the end of October 2023. In addition, there are 2.1 million people who still owe their credit card debts, which It was sold to asset management companies.

Suggested solutions

In this context, economic experts believe that there are key areas that can be modified to limit excessive use of this financial instrument, such as changing interest rates, setting restrictions on installment options, and modifying the credit limits available to consumers.

Turkish media reports indicate ongoing discussions about reducing the number of installments available for purchases using credit cards, noting the possibility of completely canceling this option in certain sectors, with the aim of encouraging responsible consumption and avoiding debt accumulation.

The Turkish Central Bank announced that it will not make a change to the current maximum limits of interest and commissions (Reuters)

In addition, the option of reducing users' credit limits and increasing minimum monthly payments is on the table, in a move aimed at enhancing individuals' financial stability and reducing the risks resulting from excessive borrowing.

As for credit card interest rates, the Central Bank of Turkey clarified that there will be no change to the maximum limits of interest and commissions at the present time, with these rates being determined based on specific criteria that include the interest rate on deposits and monetary policy, which confirms the bank’s approach in achieving a balance between... Encourage saving and avoid excessive consumption.

According to the second financial stability report for 2023 issued by the Central Bank, an increase in the use of credit cards was observed after interest rates on consumer loans rose, which prompted citizens to resort to credit cards as a means of financing.

The most prominent repercussions

For his part, economic researcher Abdel Halim Al-Abadla says that the Turkish banks’ warnings to their customers come in light of official statistics that indicate a significant increase in the number of users of personal credit cards, in addition to an increase in the average monthly use to levels exceeding the minimum wage.

He considered it a sound step in line with the strict economic policies adopted by Turkey during the current period, as it will work to reduce the high demand of consumers, which will lead to a reduction in inflation rates, but the normal situation of countries does not allow such warnings to customers who have a commercial relationship with banks governed by official laws. .

The number of individuals who did not pay their credit card debts reached 3,836,053 people in Türkiye. (Shutterstock)

Al-Abadla pointed out that the deterioration of the lira's exchange rate and the rise in inflation rates force citizens to search for other means that allow them to purchase their basic and secondary needs on an ongoing basis, adding that the purchasing culture of the Turkish people has witnessed a gradual shift towards increasing reliance on the use of credit cards.

He pointed to the increase in the percentage of traders in digital currencies within Turkey over the past years, considering it something that does not create a real economy, and builds great bridges between citizens and existing economic development attempts.

It is also likely that banks will apply their warnings to the most less influential customers, while ignoring customers with large capitals or those who are committed to paying, if there is no official obligation from the Central Bank to close credit cards for all customers.

Source: Al Jazeera