Young Malaysians find themselves in growing debt trap

PETALING JAYA – Some Malay­sian youth are increasingly finding themselves trapped in a cycle of debt, as mounting financial commitments such as repayment of credit cards, personal loans and Buy Now, Pay Later (BNPL) schemes eat into the bulk of their monthly budget.

This leaves them with only a small fraction of their salary each month, resulting in anxiety and a growing worry of their long-term financial stability.

Mr Chan Jun Hong, 29, spends about RM3,000 (S$978) monthly just to pay his debts, which account for over 60 per cent of his salary.

“A good chunk of it goes into paying my personal loans which I had taken about a year or two ago.

“I took up the loans simply because I was offered, but I ended up splurging recklessly so I regret that decision now.

“It got to a point where I was really stressed out about whether I could survive the rest of the month, so I had to beg my friend to lend me some money just in case,” said Mr Chan, who works as a senior sales associate.

He said that much of his debt also comes from the various BNPL services that he had taken up, as well as from credit cards, which he uses for daily neces­sities.

“Things got so bad that I eventually turned to a debt consolidation service provider who advised me to take a single massive loan in order to pay off all the various loans at once. So now I only have to make a single large loan payment each month, which is at least easier to manage.

“I am considering consulting with the government’s Credit Counselling and Debt Manage­ment Agency (AKPK) in the future if my debt situation gets worse,” he said.

Meanwhile, Nixie (not his real name), 29, said he usually begins the month with a maximum of about RM1,000 in his bank account, as he uses most of his salary to pay off his debts.

“Sometimes I am left with only a few hundred ringgit within the first week of the month as I would need to budget for ‘special occasions’ like Chinese New Year or my parents’ birthdays.

“I use BNPL services often due to my tendency to impulsively buy things I don’t need like collec­tibles, just because they are on sale,” he revealed.

As a result of this, Nixie, who works as an electrical engineer, said he is usually only able to make the minimum payment of between RM500 and RM900 to his credit card debt each month.

His credit card balance has been hovering at around 90 per cent of its limit for almost a year now, as it continues to accumulate inte­rest.

“For now, I can still manage things, but the growing credit card interest has me feeling really uneasy about my financial future as I may be stuck paying the debt for years,” he said.

On March 12, Deputy Finance Minister Liew Chin Tong revealed that about 40 per cent of BNPL transactions in the country are made by Malaysian youth.

He said this highlighted a worrying trend of younger consumers being overly dependent on BNPL for their daily needs. THE STAR/ASIA NEWS NETWORK