Turkey's Central Bank increases rates for credit card cash withdrawals

Turkey's Central Bank has increased the maximum interest rate on credit card cash withdrawals from 4.42 percent to 5 percent, as per a decision published in the Official Gazette. This adjustment aimed to further tighten monetary policy after the bank halted policy rate hikes in the run-up to the elections.

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Turkey's central bank on March. 16 raised the maximum interest rate on credit card cash withdrawals to 5 percent from 4.42 percent, according to a decision published in the Official Gazette, in a move aimed at additional tightening.

The revisions, part of the bank's tightening steps, aims to curb access to cheaper credit card borrowing conditions than consumer credit. The increase will also be reflected in overdraft accounts.

"Credit card cash withdrawal costs are being increased to deterrent levels. A step in the right direction, albeit late," said Hakan Kara, a former central bank chief economist who is at Bilkent University.

With the move, the central bank effectively revised upwards the Turkish lira share in the banking system, bankers said.

They said the bank, for the first time, introduced a monthly increase target for the share of Turkish lira in the deposits of corporates in the banking system.

The revisions will come into effect on March 16, the bank said.