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About 4.5 million credit cards have been deactivated since 2008 until today in Greece. As a result Greek wallets carry even less plastic than they did 15 years ago. This is what the journalist Tanos Tsiros claims in an article in Kathimerini.

Data from the European Central Bank show that by late 2013 the number of credit cards in Greece decreased to 2.926 million while in 2008 the Greeks had 6.9 million of them.

Given that ECB data get published with a delay of about a year, it is estimated that there must be less than 2.5 million credit cards in circulation at present, as 400,000-500,000 cards have been deactivated annually throughout the recession. Statistics have not reported such low numbers of credit cards even in 2000, during the drachma era.

As a matter of fact, the recession might be partially due to plastic’s tapering off. Data show that card transactions have fallen by at least €3.7 billion per year compared to pre-recession years. In 2007 and 2008, credit card transactions reached €7.7 billion per year, but have now shrunk to less than €4 billion, as evident from ECB data. Real losses to consumption and retail volumes are even greater, as credit cards have been downgraded in terms of how they are used. In 2007 and 2008, the majority of card transactions accounted for retail purchases or cash withdrawals while today credit cards are used largely for paying taxes.

At the other extreme

It seems Greek consumers have gone from one extreme to another. While in the past most had 2, 3 or even more credit cards in their wallets, today hundreds of thousands of Greeks have none, either because they had them trashed, or because the banks trashed the cards for them. In 2008, there was a nominally higher number of Greek credit cards than those in almost any country in the eurozone.

ECB data show that in 2009 Greeks had a total of 6.145 million credit cards. The same year the Swedes held 5.615 million credit cards, the Germans (a country with a much larger population) - 3.556 million, the Danes - 1.951 million, while the Bulgarians only had 1.05 million credit cards. In 2013 the situation came to something closer to normal. The number of credit cards in Greece fell to 2.926 million, while those in Germany increased to 3.9 million, and in Sweden - to 5.75 million. Both in Germany and Sweden, credit cards have been relatively under-used, as the citizens of these countries have shown a predilection for the debit card (according to 2013 data, 105 million debit cards are currently in use in Germany).

Limiting both the number of active credit cards and of ‘plastic’ transactions has led to a contraction of the citizens’ debt on their credit cards. This has taken place in two ways:

1. By the gradual repayment of debt over time. On the one hand, banks hit the brake on their retail lending either by lowering credit limits, or by keeping interest rates too high, and on the other, households have been paying their debts. As a result, overall indebtedness has fallen.

2. By refinancing credit card debt by granting long-term loans at lower interest rates.

According to recent data of the Bank of Greece, outstanding balances on credit cards now total €5.186 billion – down from the €10 billion by late 2008.

Banks imposing stricter rules

How could 4 million credit cards be wiped off the market in Greece during the recession?

1. Banks have resorted to unilateral deactivation of credit cards if the holder delays an instalment for over 6 months, however small an amount that might be. Recently, some banks have adopted even tighter policies. Credit card holders are being informed in writing that their card will be deactivated for even a month’s delay on a payment amounting to just 30 euros.

2. Many up-to-the-limit credit card debtors have chosen to refinance their obligations. They have raised long-term loans by mortgaging properties enabling them to obtain lower interest rates and longer repayment periods. Once that is done, holders tend to abolish their credit cards by themselves to avoid becoming bogged down in debt once again.

3. Hundreds of thousands of credit cards were shut down under the so-called Katseli Law, which helped households restructure their debt. Banks deactivate all credit cards of borrowers who demand protection under this law, as this act is deemed equivalent to a declaration of personal bankruptcy. A credit card is an open credit line, which a debtor, self-declared as bankrupt, may not afford to have.