Economy Turkey restricts use of credit cards for foreign travel By Reuters August 2, 2023 Creative Commons/wuestenigel Turkish travel agents say the majority of clients pay for trips by instalments using credit cards Turkey’s banking watchdog has stopped allowing credit card payments by instalment for foreign travel, such as flights, travel agency fees and accommodation, in a step seen dealing a blow to foreign travel operators. The move hit airline shares and was seen as curbing foreign currency outflows. It was one of two measures announced by the BDDK watchdog late on Monday, which it said were among coordinated steps to strengthen financial stability. Turkey’s trade deficit hits $61bn as exports drop Turks decide there is no place like home for a holiday Turkey’s central bank chief expects inflation to hit 58% Tourism operators say they have been hit in recent years by a cost-of-living crisis and weakness in the lira. The currency has lost half its value against the dollar since the end of 2021, with travellers commonly using credit cards to finance trips. “Almost all of my clients were paying by instalments,” said Cem Polatoglu, spokesman of a tour operators’ platform, noting an average trip for two cost around 50,000 lira ($1,850). “The number of people who can pay this amount in one go is very few.” “The logic (of the step) is ‘citizens shouldn’t go abroad and spend foreign currency’,” he said, adding that the foreign travel sector was also being hit by increasing difficulties faced by Turks in securing tourist visas. Polatoglu forecast a sharp fall in the numbers going abroad after a surge in spending by Turkish citizens abroad in the first half of the year to $3.17 billion – an 84 percent increase from the same period in 2022 – with such spending facilitated by credit card outlays. The credit card move also had an impact on airline share prices, with Turkish Airlines dipping 1.3 percent and the airline Pegasus dropping 2.3 percent. Istanbul’s main BIST-100 index was 0.4 percent lower. The BDDK also said in a statement late on Monday that it had decided to increase the risk weightings taken into account in calculating capital adequacy standard ratios for consumer loans, personal credit cards and vehicle loans. Turkish authorities have recently taken steps aimed at reining in chronic high inflation and reducing domestic demand, with the central bank hiking interest rates by 900 basis points in two months alongside other tightening measures.
