Recent Development
Amendments (the “Amendments“) to the Regulation on Bank Cards and Credit Cards (the “Regulation”) and the Communiqué on Maximum Interest Rates Applicable to Credit Card Transactions (the ”Communiqué”) were published in the Official Gazette on March 28, 2020.
What’s New?
- The Banking Regulatory and Supervisory Authority (“BRSA”) introduced the following Amendments to the Regulation, which entered into force on March 28, 2020:
- The minimum payment amount for credit card was fixed as at least (i) 30% of the debt incurred in the relevant period; and (ii) 40% of the debt incurred in the relevant period for the first year following the issuance of a credit card. As per the Amendments, the BRSA is now entitled to determine the minimum payment amounts in a range between 20% and 40% of the debt incurred in the relevant period, by considering the opinions of (i) the Ministry of Treasury and Finance (”Ministry”); and (ii) the Central Bank of the Republic of Turkey (“CBRT“). The BRSA announced such rate as 20% on March 31, 2020, to be applied until further announcement. Nevertheless, Turkish banks may freely agree on a different minimum rate, provided that the rate is not less than the rate announced by the BRSA.
- Further, the BRSA will be entitled to change the above limitations by considering the opinions of the Ministry and the Presidential Strategy and Budget Office.
- In parallel with the Amendments, the BRSA also announced on March 31, 2020 that the banks will be entitled to grant ”non-payment periods” to the credit card holders until December 31, 2020 wherein the banks will not request any payment (including minimum payment amount) from such card holders.
- The CBRT introduced the following Amendments to the Communiqué, which will enter into force on April 1, 2020:
- The monthly maximum contractual interest rate has been reduced (i) from 1.40% to 1.25% for credit card transactions in Turkish lira; and (ii) from 1.12% to 1% for credit card transactions in foreign currencies.
- The maximum monthly default interest rate was reduced (i) from 1.70% to 1.55% for credit card transactions in Turkish lira; and (ii) from 1.42% to 1.30% for credit card transactions in foreign currencies.
- The maximum monthly contractual and default interest rates for credit card transactions were previously announced regularly in three-month intervals, but above rates will now apply until any further announcement.
Conclusion
The Amendments aim to minimize the economic burden of the COVID-19 pandemic on credit card holders, especially considering the possible financial recession.
