Turkish credit card debts surge by 119 pct to $34.7B in 2023

The credit card debts of Turkish citizens increased by 119 percent to 991 billion liras ($34.7B) in the first 10 months of 2023. Legal proceedings were started against 12 out of every 100 people because they could not pay their debts.

Monday November 13 2023 03:57 pm

Süleyman Karan / Gazete Duvar

While credit card expenditures have increased at record levels in Turkey in recent years, credit card debts increased by 119 percent to 991 billion Turkish liras ($34.7B) in the first 10 months of 2023.

In December 2022, the amount of credit card debt was around 452 billion liras.

Due to price increases, especially raging food inflation, low-income earners rely on credit cards to sustain their daily lives due to insufficient wages. Although credit card interest rates have increased especially under the new economic administration, credit card expenditures have not decreased.

Turkey’s hunger threshold reached 13,684 Turkish liras ($478) in October, surpassing the minimum wage (11,402 liras, $398) four months in a row, data from the Confederation of Turkish Trade Unions (Türk-İş) revealed. The World Bank's Oct. 26 Food Security Update stated that food prices in the country increased by 14% in real terms, and 76% nominally over the course of a year.

The increase in credit card expenditures also affects the rate of debt default. As of October, the default rate was 11.7 percent. The banks started legal proceedings against 12 out of every 100 people because they could not pay their debts. The same rate was 7.4 percent in 2022.

Legal proceedings are initiated after the debtor does not make payment for 90 days. If the debt is not paid at the end of this period, forclosure proceedings are initiated.

As of Nov. 3, the credit volume of the banking sector increased by 71.3 billion Turkish liras. The amount of consumer loans rose by 1.2 billion liras, reaching a total of 1.5 trillion liras.

Out of these loans, 443 billion liras were for housing, 88.7 billion liras for vehicles, and 927.6 billion liras for personal loans. During this period, the amount of installment loans increased by 16 billion liras, reaching 1.3 trillion liras.

(English version by Can Bodrumlu)