Feature: Possible credit card restriction worries Turks mired in cost of living crisis

  • World
  • Friday, 16 Feb 2024

by Burak Akinci

ANKARA, Feb. 15 (Xinhua) -- The possible restrictive measures on credit cards have worried many Turks who rely heavily on borrowed money for daily needs amid the country's persistent cost of living crisis.

"Without my credit cards, it is very simple. I'll have to skip meals each day for a week until I receive my salary," Ali Gonen, a 26-year-old restaurant employee from the capital city Ankara's commercial Kizilay district, complained to Xinhua.

"I juggle with two credit card balances to keep my budget afloat because of the high cost of living, like many others," said Gonen, who recently got married.

Credit card indebtedness in Türkiye reached a record high in 2023 and exceeded 35 billion U.S. dollars at the end of the year, increasing 2.5 times compared to 2022, according to January data from the Banking Regulation and Supervision Agency (BDDK).

Gonen said without his cards, he cannot make ends meet with his 17,000 Turkish lira (about 554 U.S. dollars) salary, also the recently-hiked minimum wage earned by millions of workers in Türkiye.

"Food and housing are the main problems. They take 80 percent of our budget," he said.

Throughout 2023, Turkey suffered high inflation with an official annual rate of 64.8 percent in January and a rising cost of living for millions of households despite government measures to tame price increases.

Late last month, Alparslan Cakar, chairman of the Banks Association of Türkiye, said that restrictive measures are likely to be imposed by authorities on cards because of mounting debts that have reached alarming levels for consumers and banks alike.

Credit card sales rose 159 percent in 2023, according to Cakar.

The potential measures related to credit cards will include limits on installments and credit limit controls, local media reported last week, citing sources at the central bank that wanted to reduce demand to fight runaway inflation.

Last week, the central bank's new chief Fatih Karahan confirmed that the bank is working on credit card regulations that will be announced soon.

Some four in 10 Turkish people have more than one credit card, according to a survey conducted by the Istanbul-based Areda Piar research company last December.

Nearly 80 percent of respondents said they see their cards as a "necessity" to pay for daily needs while over 30 percent of the respondents said they pay only the minimum amount due on their credit card bill each month.

Over the past years, there has been a shift towards credit card reliance, especially since the pandemic and afterward, when cash-squeezed citizens have seen their debts climb beyond their income, carrying their balance month to month.

Echoing the volatility of the nation's monetary landscape, monthly price increases topped 6.7 percent in January, the highest in months, putting further pressure on low and middle-income consumers.

"We have to live on borrowed money. We spend the money that we haven't got in our pocket. I know it's wrong, but everyone around me is doing the same," Ismet Gundes, a seller at neighborhood markets, said to Xinhua.

The 47-year-old father of two explained in a marketplace in Cankaya district that he has accumulated a credit card debt of around 50,000 Turkish lira (about 1,635 dollars).

One consolation, he said, is that banks have not declared him insolvent as he's attentive to pay the minimum amount due each month. "I still can use my cards. That is what matters to me," this seller added.

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