Threefold increase in non-performing credit card debt: Citizens unable to pay

In the last year, non-performing credit card debt has increased by 245 percent, while non-performing personal loan debt has risen by 59.9 percent.

According to a report in Birgün, the increase in debt that citizens have failed to pay, leading to legal follow-up, has reached alarming levels. Loans that banks cannot collect, or non-performing loans, indicate that the economy is stalling.

Data from the Banking Regulation and Supervision Agency (BDDK) for the week of July 19 showed that the crisis in loan collections is growing. Non-performing loans, which banks have placed under legal follow-up because they could not be collected at maturity, increased by 13 billion 323 million liras in one week, reaching 238 billion 385 million TL. Of this increase, 3 billion 658 million liras consisted of personal loan and credit card debts.

40 PERCENT INCREASE IN THE LAST YEAR

Although the ratio of non-performing loans to the total loan stock is still considered to be at a low level, the rapid rise that began in December of last year continues. While non-performing loans have increased by 24.5 percent compared to the last week of December last year, the increase over the last year has reached approximately 40 percent.

Rising non-performing loans due to increased credit interest rates have hit citizens the hardest. The high level of interest rates and high inflation have made it difficult for citizens whose incomes have not increased to repay their debts.

Personal loan and credit card debts, which have been placed under legal follow-up by banks because citizens could not pay them on time, have seen an increase of 30 billion 514 million liras since the beginning of the year. Non-performing loans originating from personal loans and credit cards, which have increased by 68 percent since the last week of December, have reached 75 billion 349 million TL.

RISE FROM 25 BILLION TL TO 39 BILLION

In the last year alone, non-performing credit card debt has increased by 245 percent, while non-performing personal loan debt has risen by 59.9 percent. Non-performing credit card debt, which was 10 billion 99 million last year, reached 34 billion 859 million TL as of July 19, while non-performing personal loan debt rose from 25 billion 336 million TL to 39 billion 757 million liras.

There has been a significant increase in the non-performing ratio of commercial loans, especially in the last four weeks. Non-performing commercial and other loan debts, which were 147 billion 710 million TL in the last week of June, increased by 10 percent to reach 163 billion 35 million TL. The annual increase in non-performing commercial loans was 21.3 percent. The non-performing loan debt of SMEs increased by 18 percent in the last year, from 53 billion 46 million liras to 62 billion 603 million TL.

Before the general elections, maximum interest rates and late payment interest rates for credit cards were applied at levels of 1.36 and 1.66 percent due to a low-interest credit policy. With the first interest rate hike decision of the economic management that changed after the elections, credit card interest rates, which were first increased to 1.91 percent, are now applied at 4.25 percent. The late payment interest rate is also at the 4.55 percent level.

According to Central Bank data, the average annual interest rate for personal loans is at the 75.44 percent level. The average annual interest rate applied to commercial loans is 62.80 percent.