Banks stop cash advance withdrawals from credit cards

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The Central Bank of the Republic of Turkey took a decision that makes cash withdrawals and jewelry expenses from credit cards more expensive. 

The amendments will be valid for the cash withdrawals and jewelry expenses made using credit cards from May 16 on.

Economist Mustafa Sönmez, talking to bianet, explained the decision by the Central Bank as an attempt to stop the rush to foreign exchange and gold purchases. 

"There is a tendency to purchase foreign currencies and gold which are seen as "safer" because of the political uncertainties in the country and the worries related to the possibility that the Justice and Development Party will come to power again," said Sönmez. ,

He added, "People are withdrawing lira from the banks using their credit cards -which already costs them a monthly interest of 1,36%-and they buy foreign currencies or gold." 

"The companies are doing the same thing in the name of consumer loans or commercial loans. Thus they take a loan in lira and they buy gold or foreign currency. 

"Of course, this hikes the demand for foreign currency and the price of foreign currency. Whereas, what the government has been trying to do for a long time now is to try to keep the exchange rates low and try to keep people in lira, what they call "liraisation." 

"But when the rush to foreign currencies cannot be prevented, they bring bans to the banks. They impose on the banks to limit such credits, to limit or even stop cash advance withdrawals from credit cards, and to limit consumer and commercial loans. This is what we are experiencing at the moment. 

"I do not know how far it will work. I believe that this rush will continue until the election is over," told Mustafa Sönmez bianet. (VC/PE)