Cash from credit card as last resort
Güncelleme Tarihi:
by Ebru Tuncay - Referans
OluÅŸturulma Tarihi: Nisan 22, 2009 00:00
ISTANBUL - Survival is the name of the game for households. Thousands of Turkish people resort to withdrawing cash from their credit cards, as they have no other means to obtain money to foot their bills. Cash withdrawals on credit cards have risen 22 percent to 5.1 billion Turkish Liras ($3.1 billion) in the first quarter of the year over the same period a year earlier.
Turkish people are increasingly drawing cash on their credit cards, taking on high interest rates to meet pressing needs, as banks began to implement tighter policies to lend loans due to the global crisis and prefer to have commercial relations with the customers that do not face problems in payment.
Cash withdrawals on credit cards rose 22 percent to 5.1 billion Turkish Liras ($3.1 billion) in the first quarter of the year over the same period of 2008, according to figures from the Interbank Card Center, or BKM, which monitors transactions. Meanwhile, the consumer loan volume of banks declined 644 million liras during the first quarter of the year.
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Since the end of October, when the crisis was fired up, the banks’ consumer loans have contracted $2.6 billion liras. The amount of cash advance rose to 12.2 billion liras over the period.
Those who cannot access consumer loans, whose rate range between 1.5 and 2 percent, are orienting toward cash advances, which have a monthly interest of 4 to 4.5 percent. But this has made it difficult for consumers to pay back their debts, with unemployed people and those who have no hope for being awarded a bank loan constitute a substantial proportion of cash withdrawals on credit cards.
Non-performing loan troubles
The problems in customers’ paying back the withdrawn cash increased the rate of non-performing loans. The banks’ non-performing loan receivables rose 45 percent since September 2008 and reached 2.9 billion liras. The amount of non-performing cards, which was 1.9 billion liras in September 2008, reached a peak level of 2.9 billion liras as of the end of March this year.
During the first three months of the year, non-performing credit cards climbed 17 percent. The number of those that are unable to pay their credit card debts to banks rose 183 percent to 447,000 last year. During the first two months of this year, 154,000 people could not pay their card debts.
According to the BKM data concerning the first quarter of the year, credit card expenditures rose 14 percent to 46.1 billion liras compared to the same period of last year. The domestic usage turnover of the bankcards totaled more than 42 billion liras. The total transactions via bank and credit cards between Jan. 1 and March 31 of this year amounted to 88 billion liras. In the first three months of this year, credit cards were used most at markets and shopping centers.
The usage rate of credit cards was 16.6 percent at markets and 13 percent at oil stations, 9.8 percent in telecommunication sector, 7.7 percent in wear and accessories, 6.7 percent in electronic goods and computer sectors. As of the end of March, there are 43.551 million credit cards and 59.699 million bankcards, 22,321 ATMs and 1.629 million POS terminals.
According to BKM data, e-trade also witnessed a record level of increase. The number of workplaces involved in e-trade rose 44 percent and reached 47,000 stores. Although Internet shopping constitutes a small share in total figures, it still rose to 2 billion liras.
Cash withdrawals on credit cards rose 22 percent to 5.1 billion Turkish Liras ($3.1 billion) in the first quarter of the year over the same period of 2008, according to figures from the Interbank Card Center, or BKM, which monitors transactions. Meanwhile, the consumer loan volume of banks declined 644 million liras during the first quarter of the year.
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Since the end of October, when the crisis was fired up, the banks’ consumer loans have contracted $2.6 billion liras. The amount of cash advance rose to 12.2 billion liras over the period.
Those who cannot access consumer loans, whose rate range between 1.5 and 2 percent, are orienting toward cash advances, which have a monthly interest of 4 to 4.5 percent. But this has made it difficult for consumers to pay back their debts, with unemployed people and those who have no hope for being awarded a bank loan constitute a substantial proportion of cash withdrawals on credit cards.
Non-performing loan troubles
The problems in customers’ paying back the withdrawn cash increased the rate of non-performing loans. The banks’ non-performing loan receivables rose 45 percent since September 2008 and reached 2.9 billion liras. The amount of non-performing cards, which was 1.9 billion liras in September 2008, reached a peak level of 2.9 billion liras as of the end of March this year.
During the first three months of the year, non-performing credit cards climbed 17 percent. The number of those that are unable to pay their credit card debts to banks rose 183 percent to 447,000 last year. During the first two months of this year, 154,000 people could not pay their card debts.
According to the BKM data concerning the first quarter of the year, credit card expenditures rose 14 percent to 46.1 billion liras compared to the same period of last year. The domestic usage turnover of the bankcards totaled more than 42 billion liras. The total transactions via bank and credit cards between Jan. 1 and March 31 of this year amounted to 88 billion liras. In the first three months of this year, credit cards were used most at markets and shopping centers.
The usage rate of credit cards was 16.6 percent at markets and 13 percent at oil stations, 9.8 percent in telecommunication sector, 7.7 percent in wear and accessories, 6.7 percent in electronic goods and computer sectors. As of the end of March, there are 43.551 million credit cards and 59.699 million bankcards, 22,321 ATMs and 1.629 million POS terminals.
According to BKM data, e-trade also witnessed a record level of increase. The number of workplaces involved in e-trade rose 44 percent and reached 47,000 stores. Although Internet shopping constitutes a small share in total figures, it still rose to 2 billion liras.