Turks seek relief from urgent debt in cash advances

by Shelton on September 24th, 2015

filed under Cash Advances

The amount loaned in cash advances surged 27.7 percent during the first six months of this year, totaling TL 26 billion Turkish lira, according to recent Interbank Card Center (BKM) data.

The figures indicate that the primary purpose for the increase in cash advances stems from consumers attempting to pay off existing debt, and that overdrafts and unpaid balances have also risen. It also indicates that cash advance loans are being granted in spite of a recent law that prohibits consumers from obtaining a cash advance if they have not made at least three payments amounting to 51 percent of their present balance within one year. BKM figures also show that the number of credit cards in Turkey increased by 800,000 during the first six months of this year. A recent report from the Turkish Banking Union (TBB) said that individual debt in danger of not being repaid has reached 36 percent of all personal debt, the total of such debt reaching the TL 135.1 billion mark in Istanbul. The provinces with the highest total value of individual debt risk are Istanbul, Ankara, Izmir, Bursa and Antalya, while those with the highest individual debt risk per capita are the provinces of Van, Ankara, Mersin, Diyarbak?r and Izmir. The overall individual debt risk in the province of Van increased by 87 percent during the last 12 months alone. The savings rate in Turkey is notoriously low, and the growth boom of the 2000s was largely fueled by consumer spending buttressed by credit card usage. Even though the overall population of Turkey only rose from 70.6 million to 77.7 million between 2007 and 2014, per capita debt in Turkey skyrocketed more than threefold in the same period. In 2007, per capita debt was TL 1,341; in 2008, TL 1,636 and in 2009, TL 1,789. While the corresponding figure rose to TL 2,341 in 2010, it further surged to TL 2,996 in 2011, TL 3,516 in 2012 and TL 4,330 in 2013. However, The Turkish household savings rate among the urban population climbed by 1.7 points to 13.2 percent in the first quarter of this year, indicating growing consumer concerns over the rising inflation rate and economic uncertainty ahead of Junes parliamentary election, bank data indicated. High growth rates sustained in the first years of Justice and Development Party (AK Party) rule have given way to more sluggish rates in recent years. Climbing savings rates, on the other hand, weaken the governments hand in its bid to build a domestic growth model, or a soft landing.

Today it is still possible to apply for a line of credit or a credit card from certain Turkish banks by simply sending a text message. Figures from earlier this year showed Turkey to have the highest ratio of credit card debt to overall consumer debt among European countries. Meanwhile, reports continually appear in the Turkish press regarding the high number of consumers unable to pay their credit card debt.

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