Egypt restricts the use of credit cards in foreign currencies
The Central Bank of Egypt asked commercial banks on Tuesday to impose restrictions on customers' use of credit cards for foreign currency transactions at home and abroad, marking the second time in a week that it has taken strict measures on cards.
Last week, the Central Bank asked banks to suspend the use of Egyptian pound debit cards for purchases outside the country to stop the drain of foreign currency. Now, in verbal instructions to banks, the Central Bank has expanded the restrictions to include credit cards.
The Central Bank said in a press statement: “In light of what has recently been observed of some speculators misusing these cards by making cash withdrawals from abroad without actually traveling, instructions have been issued to banks to open and activate the maximum credit limit granted to the credit card for use abroad.”
The bank added that this procedure will take place “as soon as the customer contacts the customer service center of the card-issuing bank and is notified of his travel abroad in accordance with the regulatory procedures applied by the bank.”
Three bankers said that local transactions will now be limited to the equivalent of $250 per month.
Egypt has been facing an increasing shortage of foreign currency for two years, and has kept the value of the pound stable against the dollar since March, despite the widening gap with the black market rate.
Transactions are made with debit and credit cards at the official rate of about 31 pounds to the dollar, while the dollar is sold on the black market for about 40 or 41 pounds.
“What they discovered is that 70% of credit card use is from residents of Cairo ordering things from abroad,” a senior banker said.
He added, "If you are traveling, you will get your credit limit, whatever it is, 32,000 Egyptian pounds ($1,000) or so, according to the bank you are dealing with, but you must inform the bank before traveling."