Turkish Prime Minister Recep Tayyip Erdoğan has called on people not to use credit cards extensively as he says the banking sector maximizes its profits extensively through the credit card system at people’s expense.

Speaking at an iftar (fast-breaking) dinner that was held for martyrs’ families in Ankara, Erdoğan slammed many bank owners for making huge fortunes through exploiting the credit card system.

“I call on people not to use credit cards. My people have enormous debt to banks. A single bank — I will not name it here — takes in TL 600,000,000 per year through credit card use,” Erdoğan said in his vehement criticism of the way the financial system operates in Turkey.

He says if people cautiously spent money in accordance with their income, there would be no need to use credit cards, which only bring massive debts to poor people.

Erdoğan and members of his government have accused speculators and a “high-interest-rate lobby” of stoking volatility in financial markets to make a quick profit at the expense of the Turkish economy.

With the prime minister also keen to maintain strong economic growth ahead of elections next year, the central bank has been reluctant to hike rates following a credit-fuelled boom.

But the country’s assets have been hit along with other emerging markets since the U.S. Federal Reserve suggested in May it would begin scaling back its stimulus program, while weeks of often violent anti-government demonstrations last month damaged Turkey’s reputation for stability added to the pressure.

Governor Erdem Basci signaled on Monday the central bank may raise rates next week to stem a slide in the Turkish currency, which has sunk to record lows against the dollar in recent weeks.

That would make the lira and lira-denominated assets such as Turkish government bonds more attractive to foreign investors, as well as pushing up commercial banks’ lending rates.

Erdoğan, who repeatedly said last year he wanted real interest rates of zero percent, vowed last month to “choke” speculators growing rich off “the sweat of the people”, urging Turks to put their money in state not private banks.

“I didn’t say “interest rate lobby” recently for nothing. I say these things because I know something,” Erdoğan said.

source: todayszaman