Turks are trying to lower their credit card limits, bankers say, after Turkish President Tayyip Erdogan’s ruling AK party proposed a bill that would raise rates for some cardholders as part of efforts to finance the defense industry.
The bill, presented to Parliament over the weekend, also requires companies and individuals to make additional contributions to the fund through their tax returns and provides for additional fees for Turks who buy and sell real estate and vehicles.
However, the changes regarding credit cards – which provide for an annual contribution rate of 750 Turkish lira ($22) for cards with limits above 100,000 lira – have drawn particularly harsh criticism from consumers and economists. Three bankers who spoke to Reuters point out that such a measure could reduce the number of credit cards in use in Türkiye.
“We are seeing an increase in requests to reduce credit card limits. Banks have begun to discuss and plan the impact of the draft regulations. They will see what they can do to limit the impact,” said one of the bankers, who spoke on condition of anonymity.
Some users on social media argued that such a rate is unfair because the credit card limit that a bank assigns to a customer does not mean that they will spend that amount of money.
Economist Mahfi Egilmez said in his X account that the thinking behind the proposals is confusing. “Taxes cannot be collected from credit card or loan limits. A loan is a debt. The tax is something that is charged to the creditor, not to the debtor (…) As we move away from science, we enter into a terrible confusion of concepts,” Egilmez wrote.
In Turkey, a country of about 85 million inhabitants, there are approximately 126 million credit cards in use, and transactions worth 1.25 trillion lira ($36.48 billion) were carried out in August, according to data from the Interbank Card Center. .
Turks have increasingly turned to credit cards for purchases to survive high inflation that has eroded household incomes and savings, with less access to financing.
Due to the high costs of borrowing, with loans granted to consumers at around 70% annually, consumers are more likely to purchase items in installments, a widespread trend.
