Turkey will introduce new controls to limit the popular use of credit cards to pay for goods and services via instalments and restrict mortgages and car loans in an effort to deflate the growing credit bubble.

Casual observers in Turkey will have seen the boom in bank card use and payment of even the smallest purchases by credit card as they go about their daily business.

Shoppers go out armed with multiple cards in their wallets and juggle them sometimes splitting even their supermarket bill over more than one card.

Cashiers can often be heard offering the option of ‘taksit’, payment by instalments.

Many Turkish people have more than one card and juggle their monthly spend between them.

In addition easy loan credit has resulted in a limited housing loan boom and a boom in new cars on the roads.

The Turkish Government hope to cool down the demand for credit with a series of new measures to bring the country’s growing inflation and current account deficit (the difference between imports and exports) to manageable levels.

The first of the measures were brought in on 1 January 2014 with increased taxes on new car purchases by 5 to 15 percent.

On the Never-Never

The next will take place on 1 February 2014 when the Turkish Banking and Supervision Agency (BDDK in Turkish) introduce a range of new controls on the use of credit cards and loans.

These will include:

– Property loans limited to 75 percent of the purchase price

– Car Loans – 50 percent loan to value on cars costing more than 50,000 TL and a maximum 70 loan to value on cars below 50,000 TL. There will also be a limit on the number of instalments and loan term.

– Ban instalments on the purchase of fuel, jewellery, food and telecommunication products.

– Limit the maximum instalment periods for goods and services to just 9 months.

It is also hoped that the new rules will encourage citizens to start saving rather than spend. But with so much credit to pay off that could take some time.