13/04/2025

ON SUNDAY APRIL 13, 2025 theSunday Special III

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The rise of Buy Now, Pay Later in Malaysia MALAYSIA has witnessed a significant shift in consumer spending habits in recent years, particularly with the advent of Buy Now, Pay Later (BNPL) schemes. These services allow consumers to make purchases immediately and defer payments over a set period, often without interest. While BNPL offers flexibility and convenience, it also raises concerns about potential over-indebtedness among Malaysians.

Distinguish between wants and needs BNPL services can blur the line between essential purchases and discretionary spending. Exercise discernment by prioritising necessities over non-essential items. This approach helps mitigate impulsive buying behaviours that BNPL schemes might encourage, thereby safeguarding your financial health.

Monitor your spending habits Regularly reviewing your financial activities is essential when utilising BNPL services. Implement a system to track all expenditures, including BNPL repayments, to maintain a clear overview of your financial obligations. This practice aids in identifying spending patterns, allowing you to adjust your budget proactively and avoid potential financial pitfalls.

In the latter half of 2024, BNPL transac tions in Malaysia experienced a significant surge, reaching RM7.1 billion, up from RM4.9 billion in the first half of the year. By Decem ber 2024, according to Finance Minister II Datuk Seri Amir Hamzah Azizan, the number of active BNPL users had risen to 5.1 million, with the majority aged between 21 and 45, earning less than RM5,000 per month. “Currently, 12 companies in Malaysia offer BNPL schemes,” he recently said during the question-and-answer session in the Dewan Negara. The ease of access to BNPL services, often integrated seamlessly into online shopping platforms, has made it particularly appealing to younger consumers. However, financial experts caution that without proper financial literacy and discipline, users may accumulate debts beyond their means, leading to financial strain. To navigate BNPL responsibly, consider the following:

Evaluate your financial capacity Before committing to a BNPL arrangement, thoroughly assess your financial situation. Analyse your monthly income against existing obligations to determine if you can accom modate additional payments without compromising essential expenses such as housing, utilities, and groceries. This proactive evaluation helps prevent overextension and ensures that BNPL commitments remain manageable within your budget. Understand the terms and conditions Each BNPL provider operates under specific terms that govern the agreement. It is crucial to meticulously review these conditions, paying close attention to repayment schedules, any applicable fees, interest rates and penalties for late or missed payments. Understanding these details enables you to make informed decisions and avoid unforeseen charges that could escalate your debt.

Limit the number of BNPL commitments Managing multiple BNPL agreements concurrently can lead to financial strain and compli cate your ability to track repayments. Restrict the number of active BNPL commitments to maintain control over your finances. This limitation reduces the risk of accumulating unmanageable debt and ensures that repayments are within your financial means.

Be aware of late payment consequences Failing to meet BNPL repayment deadlines can result in late fees, increased interest rates and potential negative impacts on your credit score. To prevent these repercussions, set reminders for due dates and ensure timely payments. Understanding the consequences of late payments underscores the importance of adhering to the agreed-upon repayment schedule.