Çağada Kırım: Consumers want to access credit without getting stuck on approvals

As we bid farewell to 2023 in a few days, we are entering 2024 in debt. According to data from the Banking Regulation and Supervision Agency (BDDK), individual credit card debt has increased by 168 percent compared to the same period last year. According to information from the Central Bank of the Republic of Turkey (TCMB), credit card interest rates remained stable for the first six months of 2023, but were increased every month from July to November. According to the regulation, as of November 1, the maximum contractual interest rate for TL-denominated credit cards became 3.66, and the maximum contractual interest rate for cash advances became 4.42, while the maximum late interest rate rose to 3.96 for credit cards and 4.72 for cash advances. Interest rates were not raised in December, and these rates remained the same for December as well. The comparison site encazip.com investigated how the rates from these interest hikes throughout 2023 were reflected in borrowing. The research by encazip.com revealed that despite the increase in interest rates, the demand from citizens for individual credit card borrowing continues to rise.

INDIVIDUAL CREDIT CARD DEBT IS INCREASING

According to information published by the BDDK on December 1, total credit debt reached 11 trillion 314 billion TL. In the same period last year, this figure was 7 trillion 281 billion TL. In other words, there was a 55 percent increase in total credit debt compared to last year. Again, according to the December 1 data from the BDDK, individual credit card debt in TL and foreign currency reached 1 trillion 79 billion TL. Of this, 467 billion TL consisted of installment debt, and 611 billion TL consisted of non-installment debt. In the same period last year, individual credit card debt in TL and foreign currency was 403 billion TL. Individual credit card debt showed a 168 percent increase compared to the same period last year.

HIGHEST INCREASE IN NON-INSTALLMENT CREDIT CARD DEBT

When looking at individual credit card debt, the highest increase occurred in non-installment credit card debt. Non-installment credit card debt, which was 211 billion TL in the same period last year, rose to 611 billion TL according to December 2023 data. An increase was also observed in installment credit card debt. Debt, which was 192 billion TL in the December 2022 data, became 467 billion TL in the same period of 2023. 

“CONSUMERS WANT TO ACCESS CREDIT WITHOUT GETTING STUCK ON APPROVALS”

Highlighting that a 168 percent credit increase with 60 percent inflation is quite high, Encazip.com founder and savings expert Çağada Kırım made the following assessment regarding these increases:

“Our data also shows that rejection rates for personal loans are significantly high. In this situation, consumers turn to spending on credit cards and taking cash advances as an alternative. This causes credit card debt to increase more than other types of debt. Despite rising interest rates, consumers continue to borrow.”