Turkey's medium-term program signals restriction to credit card usage

Turkey's medium-term program signals restriction to credit card usage
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Turkey is contemplating limits on credit card usage, including possible reductions in installment options and interest rate hikes, as part of its economic policy outlined in the Medium-Term Program

Credit card usage in Turkey may be limited as part of a new economic policy, following signals provided in the recently unveiled Medium-Term Program (MTP,) Turkey’s NTV reported on Friday.

Experts highlighted a noteworthy inclusion related to credit card usage in the Official Gazette's publication of the MTP among the prominent measures as part of its comprehensive strategy to design the evolving economic roadmap.

The document mentioned that credit card usage would be restructured to balance consumer demand effectively.

"A credit card is a form of credit extended to consumers. In general, we are witnessing a tendency to limit domestic demand. The number of installments could be reduced, and in certain product categories, it could even be eliminated entirely. We might witness such applications," NTV cited Erhan Aslanoglu from Piri Reis University as saying.

Meanwhile, experts expect the Central Bank of the Republic of Turkey (CBRT) to continue raising interest rates in its upcoming meetings. This development is expected to have implications for credit card and deposit interest rates.

According to economists, interest rates related to credit cards could see further increases.

Aslanoğlu commented, "Interest rates can be raised. For citizens who use credit cards like loans, such measures can serve as a more effective restraint. Ultimately, policies aiming to reduce demand either quantitatively or in terms of pricing will have consequences."

In June 2022, the minimum payment amount was increased for credit cards with credit limits exceeding 25,000 Turkish liras.

The minimum payment requirement, which was previously 20% of the outstanding balance, was raised to 40%.

For credit cards with limits below 25,000 Turkish liras, the 20% minimum payment requirement remains unchanged.

Economists suggest that potential regulations may also be related to minimum payment amounts.