Monthly growth in individual credit card expenditures is above 2.5 times. Economists emphasized that the Turkish Central Bank is working on limits, the card is used as a lending tool and credit card interest rates need to be normalized.
According to Central Bank data, monthly individual TL-denominated credit card expenditures increased by 147.2 percent as of February 16 compared to the same month of the previous year. While individual installment credit card expenditures increased by 114.8 percent in the same period, the increase in credit card expenditures without installments was 181.9 percent. Despite these increases, policy interest rate increases have not been reflected in the credit card rates since November 2023.
Over 180% increase in the summer months
The increase in credit card expenditures was especially remarkable in the summer months of last year. In June, July and August, compared to the same period of the previous year, the monthly increase in individual credit card expenditures exceeded 180 percent. The monthly increase in individual credit card expenditures, which slowed down slightly as the policy rate hikes that started in June also increased credit card interest rates, fell below 180 percent. Since November 2023, credit card rates have not reflected the increase in the policy rate. On the other hand, although credit card expenditures fell below 160 percent after November, the level of 150 percent was maintained.
According to Central Bank data, as of February 16, monthly individual TL-denominated credit card expenditures reached 1 trillion 228 billion 905 million 126 thousand liras, renewing the peak level as every month. In January, total credit card expenditures were TRY 1.19 trillion. The one-month increase was 3.12 percent. According to the Banking Regulation and Supervision Agency (BDDK) data, individual credit card expenditures increased by 155 percent in the week ending February 16 compared to the same week last year.
Interest-sensitive expenditures increased by 181.9%
The increase in individual installment and non-installment credit card expenditures diverges. While installment card expenditures, i.e. individual installment credit card expenditures without interest, increased by 114.8 percent on a monthly basis as of February 16 compared to the same month last year, the increase in interest-sensitive individual installment credit card expenditures is 181.9 percent. In the previous weeks, interest-sensitive individual credit card expenditures without installments increased by more than 180 percent compared to the same month of the previous year.
‘CBRT is working on limits’
Bank managers believe that the planned regulations on credit cards should be based on limits and that no measures should be imposed on cards with low limits. Economists also stated that the increase in individual credit card expenditures was out of necessity due to inequality in income distribution and high inflation. TÜSİAD Chief Economist Gizem Öztok Altıntaş said that the Central Bank is currently working on credit card limits and said, “In this study, a distinction is made as to how much of the limits are used as credit and how much is used as spending. If you have a very large limit, you use the credit card as a borrowing tool and step into the upper segment. We need to be careful when regulating credit cards. There is a very large segment in Anatolia that does business using individual credit cards. This time you are hitting the trade there. I think the steps to be taken will remain weak despite the great expectations created.”
Card interest rates need to normalize
Bilkent University Faculty Member Prof. Dr. Hakan Kara pointed out that the situation on the credit card side is not normal and said: “When you take into account the credit card interest rates and the inflation expectation of individuals, which is 80 percent, the credit card interest rate is below that. Individuals use credit cards as a lending tool. When you look at the US, the interest rate is 5 percent and credit card interest rates are 4 times higher. Because credit cards should be used as a means of payment. The reason we talk about regulations on the credit card side is that credit card interest rates have remained very low. There needs to be a normalization there.”
