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Turkey’s credit card issue could become explosive

Debt in Turkey is becoming a social crisis.
American Express and MasterCard credit cards are shown in Washington June 25, 2008. MasterCard Inc, the world's second-largest credit-card network, said on Wednesday it will pay American Express Co up to $1.8 billion to settle a lawsuit that said MasterCard and Visa blocked banks from issuing cards from their rival.   REUTERS/Jim Bourg                 (UNITED STATES) - RTX7BSI

ISTANBUL — When police arrested a man near the office of Turkish Prime Minister Recep Tayyip Erdogan in central Ankara last month, officers first thought they had caught a suicide bomber. It quickly turned out that the man, Tugrul Bayir, did not have a bomb with him, but his action was potentially explosive nonetheless. Bayir told police he wanted to stage a spectacular protest because of his credit card debt, which amounted to about $17,000. Like Bayir, millions of Turks are in the red, and many are sinking ever-deeper into debt.

The total debt on Turkey’s 57 million credit cards stands at around $45 billion, and the volume of nonperforming consumer loans is at $14 billion, a 20% increase since the end of last year. According to the Dunya daily, around 1.7 million credit card holders were unable to pay their debt in the first nine months this year, compared with 277,000 in the whole of 2009.

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