ANKARA, Aug 29 (AFP) - Get a credit card while picnicking at the weekend or in the subway on your way home from work, almost no papers needed -- seems hard? Not in Turkey, where banks are under fire for their generosity in issuing cards to people on very low budgets.
Consumer protection groups are accusing banks of setting spending limits far in excess of the cardholder's monthly income and charging very high interest rates for delayed repayments.
Interest rates range from five to 10 percent per month. Meanwhile, the inflation rate on a 12-month basis is 10 percent.
Fuelling the craze is a hunger for consumer spending among Turks who were forced to tighten their belts following a severe financial crisis in 2001 and who are now encouraged to spend as the economy rebounds.
"But macroeconomic improvement has so far added nothing to the pockets of ordinary people. They spend money they do not have... A credit card crisis is at the door," the chairman of the Consumers Union association, Bulent Deniz, told AFP.
About 200,000 broke cardholders were likely to face the bailiffs in the next two months, while another 200,000 were building up hefty debts because they only repaid the minimum amount required each month, he said.
The number of credit cards in use in the population of 70 million reached 23.2 million in June, a 36-percent increase from the same month last year, according to a report by the Ankara Chamber of Commerce.
Credit card spending, meanwhile, has rocketed by 86 percent to 9.9 trillion Turkish lira (5.5 billion euros, 6.6 billion dollars) in the same 12-month period, when the economy began to emerge from the crisis.
The chamber also warned of the social cost of the debt trap: family breakups, forced home sales and people skipping town to avoid creditors.
Alarmed over the controversy, the government last week said it had drawn up a draft law to tighten rules for issuing credit cards. It also wants tougher penalties for abuses.
Acquiring a card at present is as easy as filling in a form at stalls set up in shopping malls, supermarkets, universities and even in the streets.
Some banks send new cards to existing clients without asking for prior consent.
Banks, however, reject charges they are too generous in the issuing cards and say consumer unawareness is at the heart of the problem.
"People should spend according to their capacity to pay back... The limited number of people who do not use their cards responsibly does not represent the nearly 13 million holders (some with several cards) who use their cards properly," one of Turkey's leading banks, Garanti, said in written response to AFP questions.
The bank said cards are issued after diligent analysis of the applicants' financial abilities.
As a result, banks rejects an average of 50 percent of card applications, it said, adding that only 25 percent of those who ask for cards at outdoor stalls eventually get cards.
Banks also maintain that the increase in credit card use helps fight the black economy and boosts tax collection, two areas in which Turkish authorities have long faced an uphill struggle.
Garanti said the use of credit cards would further increase in line with economic progress in the country.
"The number of credit cards is expected to reach 35-40 million in the mid-term," it said.
The bank also underlined that the percentage of problematic accounts in Turkey was smaller than in Europe and the United States.