Changes to credit card cash advance limits on the agenda: New regulation on the way
Following changes made during the monetary tightening process, economic management is preparing to introduce new regulations for credit card cash advance limits and installment periods. It is expected that the cash advance limit, previously capped at 25 percent under the instructions of the Banking Regulation and Supervision Agency (BDDK), will be increased to 50 percent and the installment period will be extended to 6 months.
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The monetary tightening process initiated by economic management as part of the fight against high inflation has brought with it new regulations that closely concern credit card users. At the beginning of 2024, banks, under the instructions of the Banking Regulation and Supervision Agency (BDDK), had limited cash advances on credit cards to 25 percent of the card limit and reduced the installment period to 3 months.
However, the recent decline in interest rates has accelerated the normalization process in the credit market. According to a report by Sözcü, the new regulation is expected to increase the cash advance limit to 50 percent and extend the installment period to 6 months.
CREDIT CARD CASH ADVANCE LIMIT IS CHANGING
Under the guidance of the BDDK, all banks had limited their customers' credit card cash advance limits to 25 percent of the card limit. In addition, the installment period for cash advance transactions was reduced from 12 months to 3 months.
However, the recent decline in interest rates has brought a more flexible structure for credit card transactions to the agenda. Banks are preparing for a return to the old system for credit card cash advance usage.
The Central Bank of the Republic of Turkey (TCMB) implemented a 250 basis point interest rate cut in December 2024. Continuing its interest rate cuts in January, the TCMB paved the way for banks to lower their loan interest rates.
While these developments have pushed down interest rates on consumer loans, there has not yet been a change in credit card interest rates. However, the decline in interest rates on consumer loans is accelerating the normalization process in credit card transactions.
RETURN TO THE OLD SYSTEM BEGINS FOR CREDIT CARDS
Economic management plans to introduce flexibility regarding the use of credit card cash advances. In this context, increasing the cash advance limit to 50 percent and extending the installment period to 6 months is on the agenda.
If the regulation is implemented, credit card users will have a larger cash advance limit and will be able to spread their repayments over a longer period.