The Malaysian Insight

UNABLE to cover their families’ basic needs with their monthly wages, an increasing number of Malaysians are instead racking up credit card debts as their final lifeline before resorting to borrowing money from loan sharks and money lenders.

The Ministry of Finance recently reported that out of a total of 3.6 million Malaysians holding credit cards as of last June, a total of RM2.7 billion had been chalked up as overdue payments.

According to a New Straits Times report, 845 people aged 30 and above were declared bankrupt this year for failing to repay their credit card debts.

Anthony Dass, chief economic analyst at Ambank Research, said while bankruptcy cases did not account for a large percentage of the total number of credit card holders, there were still many consumers who were unable to control their spending patterns.

“Sometimes it depends on their spending habits. They like to spend more. Maybe they buy expensive clothes and so on, even though they know they can’t afford it,” he said.

However, for many of those with outstanding debts, having to use their credit cards was not a luxury or even an option, but a last resort to pay for items that are beyond their savings.

“I’m forced to use my credit card to support the cost of my travels outstation for work, as well as to pay for emergencies which my salary doesn’t cover,” said 31-year-old Shahfizul Hadie who works as an assistant engineer.

“Sometimes, my car will break down, so I use it to repair the car. To ensure the outstanding balance doesn’t get too high, I have to work over-time and only take one day off a week,” he said.

Shahfizul, who works in Shah Alam, has a credit card balance of RM3,000, for which he pays a minimum of RM250 a month to clear.

“My children are still young and my wife works part time. Her salary isn’t much,” he said.

For Nur Azwani Mohd Kamal, 30, her credit card debts of RM8,000 was chalked up mostly on household expenses and daily necessities as her monthly salary of less than RM3,000 was simply not enough to support her family of four.

She said she already spends RM900 a month on sending her two children to daycare, and at least RM500 for household items and groceries, as well as on petrol.

“I’ve already tried to save by bringing food from home to work,” said the operations manager with a private company.

“My husband and I don’t watch movies. I give my parents RM200 as allowances. If we ever want to go for an annual holiday, it has to be if we get a bonus,” she said.

Fairuz Karmila is paying a minimum of RM1,400 for unpaid bills on both her credit cards, which have a combined limit of RM14,000.

“I have very high commitments and monthly expenses. Just to go to work and eat already costs me RM800,” she said.

Fairuz said that since having children, her joint family income of RM6,000 was simply not enough to support the family as “baby goods are really expensive”.

For many of those with unpaid credit card debts, swiping their cards serves as the final option before they have to turn to money lenders to support their families.

Assistant engineer Shahfizul said he would rather pay the late charges of RM50 and the small interest incurred by the banks, than to deal with money lenders.

“For me, credit card (debts) are safer. I have seen my own cousin borrow money from the loan sharks.

“When he was unable to repay the debt because the interest was so high, he was threatened. And he finds himself with another problem.” – August 28, 2017.