Credit Card Limit Concerns in Turkey

ISTANBUL (Reuters) – Following President Tayyip Erdogan's ruling AK Party's proposal to raise fees for credit cardholders to fund the defense industry, Turks are seeking to lower their credit card limits, bankers reported.

The bill, submitted to parliament on Friday, also mandates additional contributions from both individuals and companies through their tax statements. Furthermore, it proposes extra fees for citizens engaging in real estate and vehicle transactions.

Particularly controversial are changes related to credit cards, which include an annual contribution fee of 750 Turkish lira ($22) for cards with limits exceeding 100,000 lira. This has sparked significant backlash among consumers and economists.

According to three bankers speaking to Reuters, this measure may lead to a decline in the number of active credit cards in Turkey. "We are observing an increase in requests for lowering credit card limits. Banks have commenced discussions to mitigate the regulation's impact," stated one banker, wishing to remain anonymous.

On social media, users claimed the fee is unjust because a bank's assigned credit card limit does not indicate the money that will actually be spent. Economist Mahfi Egilmez commented on his X account, criticizing the rationale behind the proposals, stating that "tax cannot be collected from credit card limits or loans. A loan is a debt; tax is collected from the creditor, not the debtor." He added, "Moving away from scientific clarity leads to a distressing confusion of concepts."

Turkey has roughly 126 million credit cards in circulation for its 85 million citizens, with 1.25 trillion lira ($36.48 billion) transacted in August alone, per data from the Interbank Card Center (BKM). High inflation has pushed Turks to rely more on credit cards for essential purchases, amid rising borrowing costs resulting in an annual loan interest rate of around 70%. This situation has led many consumers to prefer installment payments, a common feature of credit card transactions in Turkey.

($1 = 34.2644 liras)