Turks load their credit cards during Bayram holiday

Turks spent 7.7 billion liras ($1.4 billion) on their credit cards during last week’s Bayram vacation, Dünya newspaper reported on Thursday.

The spending rose by 24 percent compared with the same public holiday last year, Dünya said citing data from the Interbank Card Centre (BKM). The increase exceeded annual inflation of 16.7 percent reported for July.

Turkish banks, led by state-run lenders, have restructured credit card debt and reduced interest rates, responding to a government call to help free up spending to support economic growth. Loan rates have fallen over the past month after the central bank slashed interest rates by 425 basis points to 19.75 percent in July.  

More than 21 percent of the money was spent in supermarkets and shopping centres, 15 percent at petrol stations and 11 percent on clothes and accessories. Turks spent 16 percent of the total on food during the five-day holiday, Dünya said.

The Turkish economy has outperformed many emerging market peers over the past decade, partly due to a surge in consumer and corporate borrowing. But Turkey entered a recession in the second half of last year following a currency crisis in August, which hurt spending power. Banks are now lumbered with an increasing pile of non-performing loans.