Economy in Turkey: Credit card cash advances and installment numbers reduced

It has been reported that banks have reduced the cash advance limits and installment numbers for individuals and institutions as part of measures to limit credit growth. Tightening measures were expected to cool domestic demand in order to reduce inflation and limit credit growth accordingly. Bankers stated that credit cards had grown three times the total loans in the sector, indicating that they expected restrictive regulations on credit cards to manage inflation.

Three banking sources speaking to Reuters stated that the maximum number of installments had been reduced from 12 to three. One source indicated that limits for corporate credit cards had also been restricted.

According to BRSA data, total loans grew by over 50 percent over the last 12 months, while credit cards grew by over 150 percent.

INTEREST RATES AT 4.42 PERCENT

Last year, before the general elections in May, some banks reduced the amounts and terms that could be used for cash advances on credit cards, which became the cheapest and most common TL borrowing channel for individuals at that time with an interest rate of 1.36 percent, due to restrictions applied to other loans. As interest rates began to rise, the number of installments returned to 12.

Currently, the interest rates applied by banks for credit card cash advances are at 4.42 percent.