Turkey’s Central Bank Increases Maximum Rates for Credit Cards

(Bloomberg) -- Turkey’s central bank has changed the method of setting interest rates for credit-card transactions, leading to an increase in costs for consumers.

The monthly maximum rate will be set from Nov. 1 by adding 55 basis points to a reference level calculated using lenders’ weighted average deposit rates, the central bank said on Saturday. That pushed the monthly maximum lira rate to 1.46% from 1.25%, and for transactions in foreign currencies to 1.17% from 1%.

It’s the latest move by the monetary authority to tighten policy in recent months, following a surprise 2 percentage-point increase in its benchmark rate in September. The weighted-average cost of funding has increased more than 6 percentage points since mid-July, yet the policies have not halted a slump in the lira to record lows.

Credit card domestic transaction volumes totaled 464.5 billion liras ($55.7 billion) in the first half of 2020, having increased 4.1% from the same period a year earlier, according to data from the Istanbul-based Interbank Card Center.

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