Turkey Regulated Interest Rates for Credit Cards

Central Bank of the Republic of Turkey (“CBRT”) has recently issued the Communique on Maximum Interest Rates for Credit Cards numbered 2020/16 which entered into force on October 31, 2020 (“Communique”), adjusting the principles and procedures on the maximum contractual and overdue interest rates for credit card transactions. Accordingly, as of November 1, 2020, the monthly maximum contractual interest rate on credit card transactions in Turkish lira will be 1.46%, while the monthly maximum overdue interest rate will be 1.76%.

Determination of Monthly Maximum Contractual Interest Rates

The Communique stipulates that, monthly maximum interest rates for credit cards will be based on the reference rate calculated in accordance with the Communique on Procedures and Principles Regarding the Fees That Banks Can Charge Their Commercial Clients numbered 2020/4 dated February 10, 2020. The monthly maximum contractual interest rate on credit card transactions in Turkish lira will be determined by adding 55 basis points to this reference rate. In this respect, the calculated rate for monthly maximum contractual interest rate on credit card transactions in Turkish lira will be 1.46%.

It further sets that, the monthly maximum contractual interest rate on credit card transactions in foreign exchange will be determined by rounding up 80% of the monthly maximum contractual interest rate on credit card transactions in Turkish lira to two digits after the comma. In this respect, the monthly maximum contractual interest rate on credit card transactions in foreign exchange will be 1.17%.

Determination of Monthly Maximum Overdue Interest Rates

The Communique sets forth that, the monthly maximum overdue interest rate on credit card transactions in Turkish lira will be determined by adding 30 basis points to the monthly maximum contractual interest rate on credit card transactions in Turkish lira. In this respect, the calculated rate for monthly maximum overdue interest rate will be 1.76%. On the other hand, the monthly maximum overdue interest rate on credit card transactions in foreign exchange will be determined by adding 30 basis points to the monthly maximum contractual interest rate on credit card transactions in foreign exchange that will equal 1.47%.

Announcement of Contractual and Overdue Interest Rates

The Communique states that, rates calculated according to the method as prescribed under this Communique will be announced on the official website of the CBRT on the fifth to the last business day of each month and will be in effect on the first day of the following month.

Ezgi Ceren Aydoğmuş