- 7 hours ago
Experts warn everyday credit tools like credit cards and BNPL may pose growing household debt risks. Discussion with Managing Director of BlueBricks Holdings, Karl Ng highlights financial stress, misconceptions about repayments, and gaps in practical financial literacy among working Malaysians.
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00:08Thank you for tuning in to Niagawai.
00:10Now we want to dive into the household debt in Malaysia
00:13that has long been associated with big ticket commitments like housing and also car loans for example.
00:20But beneath the surface, a quieter perhaps, a more concerning trend is emerging.
00:25And today, many Malaysians are increasingly relying on everyday credit tools
00:29such as credit cards or Buy Now Pay Later or BNPL's visas.
00:33So while these tools offer convenience, they may also be reshaping how debt is accumulated
00:38and also are registered at the same time.
00:40So we take a closer look at whether the real challenge today is no longer about the access to credit
00:46but how well we truly understand and also manage it.
00:48So to unpack, joining us in the studio right now is Carl Earle,
00:51the Managing Director of Blue Bricks Holdings.
00:53Good morning, how are you?
00:54I'm good. Thank you for having me.
00:56Amazing. Thank you for coming all the way to our studio as well this morning.
00:59To start off, we want to discuss on the household debt.
01:02We see that it is often discussed in terms of housing loans and also major borrowing.
01:08So but from your experience, are there are the bigger risks today actually coming from smaller everyday credits?
01:14Tools like credit cards and also BNPL like mentioned earlier?
01:18It's fair to acknowledge that the debt is actually coming from housing because when BNM actually recorded bankruptcies
01:30and also like restructuring, it actually often comes from personal loans.
01:37And whereas for housing actually contributed to 60% of the debt.
01:45But something is worth taking note is that it is self-fulfilling, we think,
01:51because we assume the danger lives, sorry, the danger lives where the attention is.
01:58But usually it doesn't because in our cases, right, there are actually a lot smaller loans being accumulated
02:08because the personal loan like the housing, house refinancing is often the rescue but not the cost.
02:18So what's being rescued is because the credit card debt is very, very high interest, okay,
02:24and maybe they have family debt and maybe they owe to money lenders, okay, legal and not legal as well.
02:32So imagine like, it's like the water leaking, the big loan is actually the patch, the small loan is actually
02:42the leak.
02:44Okay.
02:45Alright, so if it goes back to like what the other small loans that we have to take notice is
02:52BNPL is up and coming
02:55because it doesn't feel like borrowing to people.
02:59It actually feels more like a repayment, okay, but it's actually a debt.
03:07So a lot of our clients come to us earning only RM2,000, but they have like five to six
03:15stack of buy and operator facilities
03:17that can accumulate up to like say RM20,000 to RM30,000.
03:21So actually no banks would actually give that one big loan for RM2,000 salary.
03:28Indeed.
03:29And that's what happened to the scenario today.
03:34So the real risk today is not what is a sin in the report, but it's the small tools that
03:41actually nobody is counting.
03:44And BNPL has that access to those earning perhaps less than RM2,000, so that's why.
03:50But because they don't really check.
03:53And the latest stats or data, Malaysia's household debt now stands at RM1.65 trillion,
04:00which is equivalent to roughly about $372 billion USD or 84.8% to the country's nominal GDP.
04:09And that's really concerning.
04:11That's almost 100%.
04:14So many Malaysians are now financially active and also digitally savvy.
04:18That's a good point.
04:18But they still fall into the debt threats.
04:21So does this suggest the issue is no longer just about access to financial products,
04:25but a deeper gap in practical financial understanding?
04:31Yes, because digital savviness and also financial literacy,
04:36these two things, people might confuse them constantly, but they are not the same thing.
04:42All right, so because apply for a loan across the app, just few screens,
04:49that is actually a speed, but not understanding what's behind that.
04:56So the easier access to it is actually the more than it is.
05:00Okay, so I think Malaysia, the gap for Malaysian, the gap isn't awareness,
05:06but actually know how the credit card charges interest,
05:12how an operator will charge you penalty on that if you fail to pay up.
05:16So, and that is actually not never thought anywhere in formal education.
05:23Correct.
05:23All right.
05:24So if I were to throw back the question to the public,
05:29is that they have to ask the question like,
05:32if I carry this balance, let's say credit card balance for 18 months,
05:38okay, so what's the amount, the total amount that I will be paying,
05:43the true cost of interest.
05:47So, but the thing is, a lot of people would learn,
05:50but learn it the hard way, but by the time it's learned,
05:55they actually will see a process.
05:58That come to me.
05:59Seek for help.
05:59Yes.
06:00So now we're seeing around 30 to 40 debt consolidation inquiries daily.
06:05So what does that volume, 30 to 40,
06:09tells us about the current financial stress levels
06:12among the working Malaysians right now, as of today?
06:17Okay.
06:19The stress is real, I'll say, and the stress is widespread.
06:24But to quote that figure, I don't think it's fair
06:28because the volume goes up, our volume goes up
06:31because we also throw in our marketing, okay?
06:35But what strikes us the most is not the case counts,
06:40or how many are the number of cases, but it's the case profile.
06:46So when we notice these people, they are actually not reckless people, okay?
06:53They are Malaysians with stable incomes,
06:56range from 5,000 to 10,000 to 15,000 to 20,000.
07:00They are paying their bills, and they are not defaulting,
07:04but their debt-to-income ratio has crept up so rapidly and so high,
07:12and they feel trapped.
07:13They can't get the loan to consolidate,
07:15and then they also can't reduce their commitment fast enough,
07:21and they feel scared.
07:23So 30 to 40 a day is only a tip of the iceberg, we think,
07:31because many more actually goes to the bank first,
07:34thousands and thousands more, all right?
07:36But we think there are actually many more that are sitting with it silently
07:44because of shame, okay?
07:47Because they don't know who to look for help.
07:50They are scared to tell their parents, their family members,
07:55even their spouse.
08:01So in your experience,
08:03what could be some of the most common misconceptions people have
08:07about concepts like minimum repayments
08:09and also compounding interest or late payment penalties?
08:12Because all this, the one that I mentioned earlier,
08:15is super important actually,
08:16but they seem to actually take it just side of their eyes.
08:21So what do you think about it?
08:23Yeah.
08:23So three things come up constantly,
08:26like what you're saying,
08:27minimum repayments, compounding interest and late penalties.
08:32So for minimum payments,
08:33people think that paying minimum is enough.
08:37So they actually make up to the payment already, all right?
08:41But little did they know that the minimum actually covers,
08:46barely covers the interest, all right?
08:49So many of our clients come to us,
08:52they faithfully pay for, say, four to five years,
08:56and they realize that the principal doesn't actually move so much.
09:00And there's a misconception they have about minimum payment for compounding interest,
09:07the same.
09:07So we actually show our clients how the debt would compile in 36 months with minimum payments.
09:18And almost everyone, they will feel shocked when they see the number, okay?
09:24Because they don't really sit down and calculate it.
09:27It's not that they fell at their maths and whatnot.
09:29So they don't just sit down and calculate.
09:31So the third one is late penalties.
09:35So many will say that, hey, if I just miss this payment,
09:38it's only 50 ringgit penalty charges.
09:40But little did they know that the 50, no, sorry,
09:44the late penalty actually will flag it into the secrets, okay?
09:49And then it will actually hinder the door for them to get other loans to consolidate, okay?
09:57Say, for example, we had clients only miss the minimum payment of, say, 50 ringgit.
10:07And then they ended up, they couldn't get a bank loan.
10:10So what do they do is that they go to moneylenders.
10:13And these moneylenders, these guys as the legit ones,
10:17and the worst is that they will actually face scammers
10:22because these people could actually give them fast money.
10:27So it's actually a double-edged sword when it comes to BNPL
10:31because the services are often marketed as convenient,
10:34also interest-free at the same time.
10:37So that's when all these users actually approve to use these services, BNPL.
10:43So do you think these platforms are unintentionally normalising
10:46debt accumulation among younger consumers or perhaps Gen Z, I would say?
10:54Unintentionally, okay.
10:56I think unintentionally is doing a lot of work in debt question.
11:01Well, BNPL is a product that's designed for adoption
11:05but it's not for our financial well-being.
11:09So, for example, in their ads, they will say it's a zero interest
11:13and then split into three payments.
11:15That sounds like a feature but not a debt tool or instrument, okay?
11:22But that's the point.
11:23It quietly removes the friction from people actually don't have the money, okay,
11:28to spend that money, all right?
11:31So here's the part most people miss.
11:35Like I said, buy now, pay later, they don't require you to,
11:42they don't require to look into your DSR, your debt service ratio, all right?
11:47So you can actually have 2,000 ringgit but have five stacks of buy now, pay later,
11:54accumulated to say 20,000 to 30,000 and bank wouldn't actually give you that loan.
12:01And many people would face problem, okay, because the tenure is short for buy now, pay later
12:14and the repayment is very, very high.
12:16And when you miss the payment, the incur penalty is very, very high too.
12:22And that's how I think they got it.
12:25So but don't, don't get me wrong, I don't think buy now, pay later is evil, okay?
12:31It's just that this product actually demands discipline.
12:37That I think we need time to equip our Malaysians, young Malaysians with.
12:43Okay, and I think that's the gap.
12:45So basically when we talk about the rising of the debt,
12:49we often relate it to the increasing cost of living and the pressure is increasing as well right now,
12:56especially considering the tensions in the Middle East.
13:00But how much of the problem is actually behavioural or educational rather than purely economic, in your opinion?
13:08Okay, from our view, I think it's both, okay?
13:12Okay, so you mentioned like, is it cost of living or behavioural, right?
13:17So separating them, I think is wrong.
13:22But it's a very, it's an important nuance.
13:26I'll say cost of living is real because I'm not going to sit here and tell people that is struggling
13:31with,
13:34you know, their groceries, rising of groceries, okay, rising of school fees, okay, medical fees.
13:41I think if I say that, I think, if I say that is purely a mindset problem, I think I'll
13:50be so wrong, okay?
13:52But what we observe every day is that two people with the same income, okay, same profile,
13:59they also have same pressures, but the one that actually with better understanding of financial literacy, okay?
14:08Like, they will ask a question, did they understand the true cost of the credit they are asking, okay?
14:13Do they actually understand the money options that they have, all right?
14:18So do they know when, who to call before the crisis hits them, okay?
14:24So I think those are important.
14:27So because we can't fix cost of living, but we can fix financial literacy.
14:35I think to prevent the difficult situation from worse than one, just like how we say prevent is more important
14:51than cure.
14:53I think that's where education matters the most.
14:58You know, as we see the digital is moving so fast and also complex at the same time,
15:03what do you think about, are we equipped enough to actually adapt to the current digital world,
15:11especially with all these financial tools and services available right now?
15:17Are we more exposed and are we equipped at the same time with enough digital literacy?
15:22Okay, it's a bit complex, but okay, I was trying to nail it down, okay?
15:26So financial education provides protection, but I think it's no longer guaranteed, okay?
15:35Because the credit ecosystem today is very sophisticated, okay?
15:40So we can see that even informed customers today suggest, sorry, informed customers actually struggle to navigate, okay, the system.
15:54So, but we see that the educated clients make better decisions at the point of entry.
16:03So when they actually apply for a loan, they borrow more intentionally, okay?
16:11So once they are in, once the commitments actually step up, okay,
16:17we see that the same mathematical problem, I mean the pressure, actually applies to everyone.
16:23Okay, so go back to the question that you asked,
16:25it's financially educated people, it's still actually the same vulnerable,
16:32as vulnerable, as vulnerable, and then we will say yes, okay?
16:35Because we can see many of our clients actually come to us,
16:39they are sophisticated people, and in good income,
16:43range from 5, 10, to even 30,000, 40,000.
16:47Maybe see sweets as well?
16:48Yes.
16:49That's the reality on the ground, it's happening.
16:51So at what point does debt typically shift from being manageable to becoming financially dangerous?
16:57And are most Malaysians recognize those warning signs early enough?
17:02Okay, so I think for us, from the financial side, bank as well,
17:08we always look at debt servicing ratio, okay?
17:13So we always will watch how much is the income goes to loan repayments.
17:20Okay, so we actually noticed that there's many people today,
17:28they come to us with DSR over 80%, or even 90%.
17:35And imagine this, today you are getting income of 5,000,
17:40only left with 500 the next day that you collected.
17:44And that's the reality that we are seeing.
17:46So do Malaysians recognize the warning signs enough?
17:49I don't think so.
17:51But we understand that because there's no clear alarm to tell them that,
17:54hey, you only left with this much.
17:56Okay, so what people would do is that most people come to us that when they have already started missing
18:05payments,
18:07okay, or when banks actually started to reject them.
18:10So very few actually come to us when the first warning sign actually appears.
18:17And that's the education gap that we want to fill as well.
18:21So do current financial literacy efforts in Malaysia actually focus too heavily on theory
18:29while neglecting real-life financial behavior and also decision-making?
18:35We agree to that because most financial education teachers on like concepts like what is interest,
18:43what is a budget, what is compounding.
18:45I think that's fair and they are important.
18:48But it doesn't actually help them to look at the real scenario whereby they face difficulty
18:55and how to actually navigate a financial decision on that.
19:00Okay, so real financial decisions almost always happen under pressure.
19:08Okay, okay, so it happens when your family member needs help.
19:14You get sick, when you get sick.
19:15When you get sick, when your loved one gets sick.
19:18And when something actually breaks down, okay, when you need the renovation so badly
19:25because there's a hole on the rooftop.
19:27Licking, yeah.
19:28Yeah, so what we need more I think is scenario-based, decision-oriented education.
19:37Okay, but what we can see now is that on next year, 1st of January, 1997,
19:44there is a financial reform that people actually will sit for a test.
19:49There's 15 minutes, okay, test module for people actually taking more than 100,000 person loan.
19:56But we would like to push the policy further to apply it to every credit facilities upon their onboarding.
20:06Okay, like by now pay is this onboarding or credit card, sign up and all that.
20:14Personal loan as well for the small ones as well.
20:17Okay, that is actually very important.
20:18I think that practical literacy that will actually help people change their behavior
20:23because they will actually walk them through like the real situation of if you fail to pay this,
20:31what's the consequences?
20:32If you fail that test and then you are not qualified to get that loan.
20:36So in a way, it's a financial advisor.
20:39That is actually a bank negara law for people that wants to take 100,000 more personal loan.
20:48They have to sit for a test.
20:50Okay.
20:51And that is a test that is jointly developed I think by AKPK.
20:54Okay, maybe to finish this off, let's put a situation.
21:03If Malaysia fails to close this financial knowledge gap,
21:07what could the long-term consequences look like for household financial stability
21:11and perhaps the broader economy as well?
21:14Okay, I think I'm not qualified to forecast economically because you're not from that field.
21:23But let me speak like what we observe in our line.
21:30If nothing changes, we think down the road, people will arrive at the crisis point
21:37whereby the credit cards max out, many buy now pay laters
21:43because pay laters can even like fund them to buy small things, expenses.
21:51Okay.
21:52So these people will get rejected by banks and they'll get desperate.
21:56Okay.
21:57This number will grow.
21:58So we can see that desperate people will actually make desperate decisions.
22:04Okay.
22:04And they will turn to illegal money lenders.
22:07All right.
22:10These financial choices that will actually destroy their relationship.
22:13Okay.
22:15They will have sleep deprivation.
22:17Cannot sleep.
22:18Cannot work.
22:19Okay.
22:20That would actually remove them from the productive economy for years.
22:29Okay.
22:31So at the individual level, I think this is a tragedy.
22:35But at a micro level, I think this is a structural problem that we can fix.
22:42So here's the important thing.
22:45Like that's why how we exist.
22:48Okay.
22:49So the debt consolidation actually works.
22:52The professional guidance actually works.
22:56Okay.
22:56So people who decided to come to us early actually almost always find their way out.
23:03All right.
23:04So I think the knowledge gap today isn't just about financial.
23:10Okay.
23:11It's also about the culture of it.
23:14Like we talk about it freely, talk that about it freely and not having shame.
23:22Okay.
23:24Just like how we will attend to a medical checkup.
23:28Okay.
23:29So ask for help.
23:31And then that's the message I think we want everyone, every Malaysian to hear.
23:37Yeah.
23:37So to those watching right now, if you're trapped in the debt hole, it's not the end of the world.
23:42You can get help.
23:44Please seek help, especially from Blue Bricks Holdings.
23:47With Mr. Carl perhaps.
23:48So maybe as credit becomes more accessible and embedded in daily life,
23:53the real question may not be how much we borrow.
23:56It's how well we understand the true cost of borrowing.
24:00So because in today's financial landscape, knowledge is no longer just power.
24:04It's actually a protection.
24:05So thank you so much.
24:06I would say to Mr. Carl Earl, the Managing Director of Blue Bricks Holdings,
24:09for your insights and time spent with us this morning.
24:11And you can find this whole discussion on all of our social media platforms
24:15and that includes astroonee.com.
24:16Thanks for watching.
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