Rate on credit card cash advances increased

ANKARA

The Central Bank has raised the monthly maximum interest rate on credit card cash withdrawals from 4.42 percent to 5 percent.

The bank’s decision, which aimed at curbing credit card spending, was published in the Official Gazette on March 16 and came into force.

The rate charged by public banks on personal loans rose to 4.94 percent last week, while private banks apply a rate between 4.5 percent and 5.5 percent for the same type of loans.

Meanwhile, the annual interest rate on personal loans climbed to 63.36 percent as of March 8, just below a 22-year high of 63.42 percent in early January, according to data from the Central Bank.

Earlier last week, some lenders introduced limitations on the number of installments on credit card cash advances.

Those moves came after the Central Bank said it was closely watching credit card spending at a time when inflation is running above 67 percent.

Both public and private banks reduced the number of maximum installments from 12 to three months.

Meanwhile, the Central Bank’s Monetary Policy Committee (MPC) will meet this week on March 21 to decide about its main policy rate.

At the MPC meeting held in February, the bank held its key interest rate - the one-week repo auction rate - constant at 45 percent, pausing after eight straight increases aimed at taming consumer prices.

Most economists expect the Central Bank to keep the rate unchanged at this week’s rate-setting meeting.

The current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range, the bank said in a statement released after the Feb. 22 MPC meeting.

Monetary policy stance will be tightened in case a significant and persistent deterioration in the inflation outlook is anticipated, it added.