Credit-card use, debt go global

ISTANBUL, Turkey — In Turkey, where borrowing money was until very recently a family affair, being in debt carried a fearful stigma. Some even likened it to the disgrace that drives people to commit the honor killings that still occur in parts of this society.

But in a cultural shift that has swept aside centuries of tradition, credit cards have become commonplace here.

Only three decades ago, Turkey had fewer than 10,000 cards; today it has more than 38 million.

As the American blessing of credit cards became widespread, so did the American curse of debt. Outstanding card debt here ballooned to nearly $18 billion last year, six times the level five years earlier. Default rates spiked, and consumer groups protested sky-high interest charges. Newspapers were filled with stories of desperate card holders killing themselves or others.

In 2006, a fierce outcry prompted Turkey to pass a law clamping down on credit-card marketers.

"We did not listen to our ancestors' proverb," said Nazim Kaya, the president of Consumers Union, an advocacy group that helps those who fall into debt. " 'Stretch your leg only as far as your blanket.' "

Few American exports have proved as popular as credit cards. In just a generation, they have gone from a totem of Western affluence to an everyday accessory in Brazil, Mexico, India, China, South Korea and elsewhere. More than two-thirds of the world's 3.67 billion payment cards circulate abroad.

This global shopping spree has turned Visa and MasterCard into Wall Street wonders: Visa completed the largest stock offering in American history in March, and MasterCard's shares have risen almost 500 percent since the company went public in 2006.

Their real opportunities for higher profits lie abroad: In Asia, Latin America and Central Europe, card transaction volume is rising 20 to 30 percent a year, more than twice the growth rate in the United States.

But when credit cards are handed out to unsophisticated consumers, they can pile up debts that can take years to pay off, if they ever are.

While acknowledging the risks, many here argue that the advantages of credit cards outweigh their dangers.

They hasten economic development and offer convenience to people who might never have had a bank account but whose rising incomes give them the power to buy. By registering transactions, they also shrink the size of the black-market economy by allowing governments to collect taxes they might have missed.

The business is lucrative for Turkish banks: Profit per card is higher here than in America. That has made the banks attractive to foreign investors.

"This is a society that has transformed itself," said Suzan Sabanci Dincer, scion of one of Turkey's wealthiest families and the chairwoman of Akbank, a large card issuer here. In 2006, Citigroup bought 20 percent of Akbank — drawn partly, she said, by its credit-card franchise.