Does Using Credit Cards Increase Inflation?

The use of credit cards in Turkey has increased in recent years. in our pocket 8.6cm by 5.4cm Plastic cards are at the center of our lives.

Recently Minister of Finance Mehmet Şimşekbrought up the issue of installment transactions for credit cards and “We are the only ones in the world. This is not a good thing.” he said.

Increasing credit card usage It was stated that it was one of the factors that triggered inflation. So is this really the case?

Inflation is essentially the increase in money in the market.

My next definition of inflation may be a bit confusing to understand, so please pay full attention: Increasing the price of everything is called inflation.

After this extreme technical analysis we need to realize that inflation in itself is not a bad thing. If the purchasing power of the people was not affected Nobody would care about inflation.

If you earn 100 liras today and earn 90 liras, and if you earn 110 liras tomorrow and earn 99 liras, then You won’t worry too much about inflation. On paper, there is 10% monthly inflation, but purchasing power increases at the same rate. First of all, let’s put this information in our pocket, I will ask about these in the future.

Now, if more salaries are paid, if there is more money in the market, the value of money decreases. Thus, inflation occurs. Credit card usage, believe it or not It virtualizes some of the money.

When transactions are made by credit card, money that never existed It goes from some computers to some other computers. Let’s look at the website of the Interbank Card Center, “Shoppings made with credit cards have an inflation-reducing effect. While the increase in money supply increases inflation by 0.13 in the same period, credit card spending reduces inflation by 0.13 in the same period.” It is said.

Did the great Minister deceive us? No.

No. Credit cards are a double-edged sword. Credit card usage fees and commissions This causes inflation. You actually see this situation more clearly when you go shopping in a neighborhood market rather than in a shopping mall.

The socks, which become transparent after three wears and are sold in packs of 5, are printed on yellow cardboard. “50 in Cash, 55 on Card” It says, lol, that 5 lira difference is actually our 10% inflation in socks and it may or may not exist depending on our payment method. Schrodinger’s inflationit is not clear whether it is available or not until we pay.

The second element is the maturity difference in installments. Let’s say we bought an airfryer for our mother as a Christmas gift because mothers deserve the best of everything. We went and chose an airfryer from the following content. (This way, I get advertisements from the articles we write on our own website.)

Now I don’t want to show a sample model and keep anyone under control, let’s say I chose a model and the price of this model is 5000 TL. It’s not a big problem if I don’t pay any interest in installments, but if there is a interest in interest in installments and the total If I will pay 5800 TL In fact, the payment I made for the device increased, creating 18% inflation on a quarterly basis.

On the other hand, when we look at academic studies, in Turkey As credit usage increases Inflation is increasing because what happens as the money in the market increases? The value of money was falling, yes. (I’m asking, didn’t I say these?)

Our credit cards have long installment maturities and because it allows spending beyond our immediate purchasing power The money supply increases, at least partially, because companies’ receivables appear in the uniform chart of accounts.

Okay, but should credit cards not be used at all?

Minimum wage 17 thousand 2 lira It was announced as. Let’s assume that we are a citizen who pays 9000 lira for rent. We ate dinner and paid the bill. can’t get anything we are coming.

That’s why when we go and buy things in installments on a credit card, we actually pay more compared to loan rates. We use cheaper credit. This enables us to make purchases.

If we buy something, someone must have sold it to us. Thus, the economic cycle continued, The wheels are turning.

As can be seen, credit card usage is actually a inflation-reducing effect However, when combined with other factors, it does not really affect inflation. in the direction of increase can have an impact. Rather than making credit cards an easy financing option, stabilizing policies seem to make the transition easier.

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