Regulation on debts has arrived: Accumulated credit card and personal loan debts can be restructured.

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The Central Bank of the Republic of Turkey (CBRT) and the Banking Regulation and Supervision Agency (BRSA) have taken coordinated steps regarding individual credit cards. A restructuring option of up to 60 months has been introduced for those who cannot pay their individual credit card and personal loan debts.

COVERS CREDIT CARD AND PERSONAL LOAN DEBTS

The announcement regarding the amendment to the maximum interest rates applicable to credit card transactions by the CBRT was published in the Official Gazette, and the BRSA's board decision on the matter was also published on its website. Accordingly, the BRSA has introduced a restructuring option of up to 60 months for those who cannot pay their individual credit card and personal loan debts. Those who cannot pay the minimum amount of their period debt on individual credit cards will be able to restructure their existing credit card debt balances for up to 60 months. The installment amount due each month will be added to the minimum payment amount for that month. The credit card limit at the relevant bank cannot be increased until at least half of the restructured credit card debt is paid.

INTEREST RATE IS 3.11%

The CBRT has also limited the maximum interest rate to be used in the restructuring of individual credit cards to the reference interest rate of 3.11%. Personal loans can be restructured for up to 60 months without additional credit if the principal and interest payments are delayed for more than 30 days. The debtor must apply for restructuring within 1 year.

CHANGE IN MINIMUM PAYMENT RATE BASED ON LIMIT

The BRSA has also made changes to the minimum payment rate on credit cards. The limit amount for the minimum payment rate, which is 20% of the period debt, has been increased from 25,000 lira to 50,000 lira. For credit cards with a limit of 50,000 lira and below, the minimum payment rate will be 20% of the period debt, while for those above 50,000 lira, it will be applied at 40%.

WILL COME INTO EFFECT ON NOVEMBER 1

In line with the steps taken by the BRSA, the CBRT has differentiated the maximum contractual interest rates applied to individual credit cards based on the reference rate according to the credit card period debt. The rates to be determined in this context will be announced on October 24 and will come into effect on November 1.

If the reference rate remains the same, the maximum contractual interest rates will be; for credit cards with a period debt below 25,000 lira, 3.50%, for credit cards between 25,000-150,000 lira, 4.25%, and for credit cards above 150,000 lira, 4.75%. The maximum contractual interest rate for cash withdrawals/usage through credit cards will remain at 5%.