Using credit card is controversial issue in Turkey because
rising rate of using credit card can arise problems in terms of
financial woes such as consumer borrowing and also high rate of
using credit card has concerned government. As a result of this,
the banking regulator in Turkey has moved to limit on credit card
usage. According to the Banking Regulation and Supervisory (BDDK)
introduces new regulations and intends to prevent unnecessary
expense. In respect to this, there are payment restriction
regulations which ensure card holders to use credit card in terms
The purpose of draft legislation is that card holders keep away
from usage of credit card for every spending. In particular,
payment in installments will be restricted to six months for
purchases in the some sectors such as electronics, jewelry and car
rental whereas there will be restrictive to a maximum of 12 months
for purchases of furniture and household appliances. Nevertheless,
grocery store and gasoline purchases are not involved in payment
installment. In addition to this, there are restrictions for
commercial vehicle and mortgage loan. Under these circumstances,
new draft legislation will be envisaged that there is the
restriction of consumer credit to a 36 month loan and of car
credits to 48 months. Moreover, ones who have credit cards prefer
to use for social expenditures such as tourism. Especially,
government has touched on tourism issues so as to bring limitation
because it is not allowed to make use of credit card for holiday
expenditures and encourages people to shrink the rate of usage of
credit card. Due to fact that the regulation of the credit card
market alters the structure of society and people cannot benefit
from credit card in every sectors. Main aim is to protect and
control people's spending through regulations since countries
face with global financial crisis and using credit card enable them
to go deeper into debt.
Macro Economic Stability and Saving Rates
Such restrictive banking regulations have not emerged out of the
blue. The overarching reason looming behind such restrictions is
the low saving rate of the Turkish economy. In spite of
country's economic success and its association with strong
emerging markets, Turkey has one of the lowest saving rates among
the emerging economies. This problem might have been abated if it
was not intricately connected with another major problem of the
Turkish economy; namely the current account deficit. The saving
rate of the Turkish economy now stands at 12.6 % of the GDP which
is the historical low of the modern Republic and the current
account deficit for the last twelve months has reached 60 billion
dollars. Moreover the credit volume has already reached the
staggering number of 1 trillion dollars. In order to increase the
savings the Turkish government has already adopted a midterm
economic programme that will cover the periods between 2014-2016 in
which the key concern will be to clamp down the spending, increase
the saving rates alongside the reduction of current account deficit
and the inflation.
Given such an effort on the part of the Turkish government to
increase saving rates, it is no surprise that such banking and
credit related measures are being taken like limitations on
installment rates and more stringent rules for credit applications.
Therefore the banking sector in Turkey should take up this
challenge and look for new ways for operating in a strictly
regulated credit market. However the upside for the banking sector
is that the regulation will provide the banks to operate in a more
secure lending environment where the barrower has the actual
capacity to pay the loan back to the creditor institution.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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