by Burak Akinci
ANKARA, Nov. 23 (Xinhua) -- The high cost of living due to runaway inflation in Türkiye has pushed credit card expenditures of cash-strapped households to highs, dragging them into a vicious cycle of debt and even involving them in legal proceedings.
According to data recently released by the Banking Regulation and Supervision Agency (BBDK), credit card debt soared by 119 percent from last December to a record high of 991 billion Turkish liras (34.4 billion U.S. dollars) in the first ten months of 2023.
Galloping inflation caused largely by a previous loose monetary policy has fueled a cost-of-living crisis in Türkiye. This policy has been reversed following the May general elections, but Turkish consumers still suffer from high prices.
Low-income earners have to rely on credit cards to cover their rising daily expenses as their wages prove insufficient. These borrowers even need to use a second credit card to pay up the minimum due on the first one, trapped in a debt cycle.
Basar Cetin, a 42-year-old chiropractor from the capital Ankara, was a credit cardholder, however, he was sensible enough to pay all of his debt to banks and now only swipes for minor spending.
"As people cannot make ends meet because of the skyrocketing cost of living. They turn to credit cards," he told Xinhua in Kizilay, the main commercial district of Ankara, noting that, however, borrowers could be easily squeezed by interest-rate increases of the bank.
Turkish authorities have taken steps aimed at reining in high inflation, with the central bank hiking interest rates from 8.5 percent to 40 percent since June alongside other tightening measures.
Although the aggressive rate hikes have led to a rise in credit card and commercial loan interest rates, many Turks have had no choice but to rely on these plastic cards.
Amid the increase in credit card loans, the default rate reached 11.7 percent as of October, according to the BBDK.
Banks initiated legal proceedings against 12 out of every hundred because they could not pay their debts, while in 2022, the rate stood at 7.4 percent.
"I used credit cards during the (COVID-19) pandemic but then found myself unable to repay my debts. I was faced with legal proceedings and seizure decision by the court," Emircan Simsek, a waiter at a cafe in Kizilay, told Xinhua.
The young man said many of his friends have accumulated credit card debts by paying the minimum due monthly.
While the government has promised to ease consumers' hardships, a majority of Turks believe the economy will get worse in 2024, the T24 news website reported on Monday, citing a survey published by the Ankara-based SAROS Political and Social Research.
The survey showed that 57.5 percent of respondents think the Turkish economy will perform worse next year, while only 23.7 percent believe it will improve.
