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Cash Crisis Sends Credit Cards to 'Early Retirement'

Cash Crisis Sends Credit Cards to 'Early Retirement'

Tuesday, 25 February, 2020 - 11:30
Safes are displayed on sale in the Shehab Security shop in Beirut, Lebanon, November 6, 2019. REUTERS/Tom Arnold
Beirut- Nazeer Rida

Marwan, 34, has not used his credit card for four months. He carries paper money to buy his needs - a “safe” measure that would prevent him from facing a ban on withdrawals or rejection by shopping centers, restaurants, and gas stations.

Alike Marwan, thousands of Lebanese wait hours in banks to receive small amounts of money, following recent banking measures that restricted cash withdrawals to a fixed ceiling.

The decline in the dollar’s availability in the markets has greatly impacted the use of credit cards, given that 78 percent of bank deposit accounts in Lebanon are in USD.

Many believe that the crisis is likely to escalate, as banks have not made a decision to pump hard currency into ATM machines. In this regard, sources with knowledge of the matter told Asharq Al-Awsat that there would be no facilitation on banking withdrawals “at least in the foreseeable future.”

In view of the devaluation of the local currency against the USD in the parallel market, debit cards in USD are rarely used, as people still prefer to withdraw small amounts from banks and pay their daily needs with local currency.

Moreover, paying by card outside the capital, Mount Lebanon, and major cities, remains an ineffective and unusual method.

Despite restrictions on cash withdrawals, banks still allow payments with bank checks and credit cards. However, a large segment of the Lebanese prefer trading in paper currency and storing it, “to avoid any additional banking action in the future that could prevent us from accessing our deposits.”

Lea receives her salary in USD. Every month, she withdraws the permitted amount to pay her needs in LBP and store the remaining amount at home. She says that this procedure “can continue until the current crisis ends and we restore confidence in the banks.”

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