September 4, 2018
Updated: 4th September 2018
Falling into credit card debt is dangerously easy. Especially when you don’t compare credit cards and check which ones have the lowest annual percentage rates (APR), cashback rates or even the best petrol-related promos.
Too often, the average credit card holder is seduced into thinking of the card as free money and forgets that it’s a loan. On top of that, it’s also easy to overlook the fact that a credit card is a service that you have to pay for.
See also: How Well Can You Pay Off Your Debt?
Just recently, Bank Negara Malaysia (BNM) revealed that 47% of Malaysian youths have high credit card debts and 38% of them have already taken personal loans, as reported by FMT (Free Malaysia Today). Nazrul Hisyam Mohd Noh, BNM’s assistant governor, stated that last year more than 3400 people between the ages of 20 and 30 sought help and counseling from the Debt Management and Counseling Agency.
This is rather concerning as it has a high risk for these youths to be totally ridden with debt, which could eventually lead to bankruptcy in the long run.
New Straits Times, on August 21, 2017, reported that Malaysians have an outstanding balance total of RM 36.9 billion on their credit cards. While 43.6% of total cardholders settled their credit card debt completely during the January to June 2017 period, another 43.6% only paid the minimum 5% of their outstanding balance in the same period. The remaining 12.8% are cardholders who did not manage to pay the minimum required of their outstanding balance before or within the due date.
Defaulting on your credit card has its consequences. Banks will implement debt recovery services to recover the dues and your credit rating will be tarnished.
If you realized you’re being covered in debt, don’t feel bad – instead, you should start planning and taking action to mitigate the debts. Take a breather and start an action plan that can clear your debts and prioritize accordingly. Keep in mind that it will take time, and debts don’t clear up with the snap of a finger.
It can be hard to face credit card debt head-on. Don’t fall into this trap. Act now. Learn how to manage your finances with AKPK here!