The Turkish recipe of no-interest instalments for purchases paidby credit card has become the "key" to rebooting lending in banks'eyes, so that five top banks introduced this facility lastyear.
Even taxes and insurance policies can be paid in instalments thisyear, after the model had been initially provided for purchases ofelectrical home appliances or apparel.
For instance, Turkey's Garanti Bank last week introduced the optionof paying taxes by credit card in three instalments by late March.In a similar move, BCR offers the possibility of paying in sixmonthly instalments at most the value of auto liability policiessealed with BCR Asigurări. Raiffeisen has a similar partnershipwith Uniqa insurer, where payments can be divided into 12 monthlyinterest-free instalments.
At the moment the transaction is done, the total sum is deductedfrom the card's available sum, but the monthly receipt includesjust a fraction, in line with the number of instalments agreedupon.
"Since in Romania cash transactions are still preferred to those bycard, banks need to use certain 'incentives' to boost the degreecredit cards are used at among owners of such cards. Loyaltyprogrammes have become banks' most lucrative instrument, both inattracting new clients, and in boosting the use of existing cards,"says Ilgaz Kaya, marketing manager with Garanti Bank.
The programme is not new on the market, being launched by Turkey'sCredit Europe Bank (the former Finansbank) in early 2000. However,the model of interest-free instalments became highly popular lastyear, when it was taken over by top players such as BCR, BRD,Raiffeisen, Alpha Bank or Bancpost.
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