The Central Bank increased the interest rates applied to credit cards and overdraft accounts

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The Central Bank of the Republic of Turkey (TCMB) has implemented several regulations aimed at ensuring financial stability. The bank has decided to set the growth limit for vehicle loans at 2%, reducing it from the previous 3%.

Additionally, the maximum monthly interest rate applied to credit card cash withdrawals and overdraft accounts has been increased to 2.89%.

The new regulations under the selective credit and quantitative tightening steps of the Central Bank of the Republic of Turkey (TCMB) have been published in the Official Gazette and have come into effect.

Accordingly, export and investment loans, as well as loans directed towards earthquake-stricken areas, are excluded from all restrictive measures imposed by the Central Bank.

As a complementary step to support the tightening process, the monthly growth limit for TL (Turkish Lira) commercial loans within the scope of securities issuance, based on credit growth, has been reduced from 3% to 2.5%.

Export, investment, agriculture, and tradesman loans are exempt from this restriction.

To enhance the functionality of the market mechanism, the securities issuance based on interest rates has been simplified. As a result, for TL commercial loans, excluding export and investment loans, the first stage has been removed, and a single stage interest rate limit will be applied.

In addition, as part of inflation control and balancing domestic demand, the maximum monthly interest rate applied to credit card cash withdrawals and overdraft accounts has been increased to 2.89%.

The “Regulation on Maximum Interest Rates Applicable to Credit Card Transactions” has also been published in the Official Gazette.

This mentioned rate was announced on the official website of the Central Bank on July 25 and will be effective from August 1, 2023.

The default interest rate applied to credit cards for late payments has been set at 2.13%.

With the regulation, the method of calculating the maximum default interest rate for credit cards has been changed and increased. In the new calculation, nominal reference rates have been raised, resulting in higher final interest rates.

Furthermore, the new rates will also apply to overdraft accounts. The ceiling rate will be implemented on August 1, but its application to existing balances may take until the end of August (as contract changes must be notified 30 days in advance). New cash withdrawals will be subject to interest at the new ceiling rate.

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