KUALA LUMPUR: Financial commitments linked to credit cards, Buy Now Pay Later (BNPL) facilities and personal financing are becoming increasingly common among middle-income borrowers, highlighting the need for stronger financial literacy and responsible borrowing practices, according to financial consultancy Bluebricks Holding Sdn Bhd.
It said observations from debt restructuring and financing consultation cases showed that financial strain is no longer concentrated among low-income households, but is increasingly affecting the middle 40 per cent (M40) income earners segment.
Managing director Karl Ng said many borrowers earning between RM5,000 and RM20,000 a month are struggling with high debt servicing commitments, leaving them financially vulnerable to unexpected shocks such as medical emergencies, job loss or vehicle repairs.
"What we are seeing is not necessarily an income problem, but a leverage problem. Many people earn enough to qualify for multiple credit facilities, but they do not have enough buffer when unexpected expenses arise.
"In short, they have enough income to qualify for everything, but not enough buffer for any shock,” he told Bernama.
According to Bank Negara Malaysia, household debt remained elevated at 84.8 per cent of gross domestic product (GDP), or RM1.67 trillion, as of end-2025, underscoring the scale of consumer borrowing in the country.
While this is an elevated figure, the central bank considers the household sector to be financially resilient and the risks manageable.
Meanwhile, Ng said borrowers within the RM5,000-RM10,000 and RM10,000-RM20,000 income brackets recorded among the highest debt service ratios in cases handled by the firm.
Based on its on-the-ground experience, the firm receives 30 to 40 debt consolidation enquiries daily, with many borrowers only realising how quickly interest, minimum repayments and penalties could accumulate once debts became difficult to manage.
He said many clients now have less than 10 per cent of their salaries remaining after servicing debts, despite remaining current on repayments.
‘Pre-Default’ Borrowers Emerging Beneath Stable Debt Data
Ng said official indicators such as Malaysia’s household debt-to-gross domestic product ratio may not fully capture what he described as a growing "pre-default” layer, meaning that borrowers are technically still paying, but surviving only through minimum repayments and refinancing,
"People are technically still performing, but the pressure is very real,” he said.
He added that some borrowers resort to family borrowings, Employees Provident Fund (EPF) withdrawals and non-bank financing to remain afloat financially, while prolonged debt burdens are also contributing to stress and strained family relationships.
Among the most common financial mistakes observed were prolonged minimum credit card repayments, excessive BNPL usage and misunderstanding of effective borrowing costs.
Ng said many consumers underestimate how quickly small unsecured debts could snowball, particularly when only minimum repayments are made on credit cards.
"A RM5,000 credit card balance can eventually grow into much larger debt over time if borrowers continue relying on minimum payments while still spending on the cards,” he said.
The consultancy also said BNPL facilities, widely perceived by consumers as merely a payment option, are increasingly influencing banks’ lending assessments.
It said banks are becoming more cautious towards borrowers with multiple BNPL commitments, even when the outstanding amounts are relatively small, as such facilities may indicate stretched cash flow management.
The observation comes as Malaysia tightens oversight of the consumer credit industry following the implementation of the Consumer Credit Act 2025, which now requires BNPL facilities to be reflected in the Central Credit Reference Information System (CCRIS).
Stronger Financial Education, Early Intervention Needed
Ng said reducing household debt stress would require stronger regulation, earlier financial intervention and a shift in borrowing culture among Malaysians.
Recent regulatory reforms introduced by the government, including tighter oversight of BNPL operators, are in place, but Ng said financial literacy efforts should be expanded further, particularly for first-time borrowers and young working adults.
He proposed that, among others, there should be mandatory short financial literacy modules for consumers applying for credit cards, personal loans and BNPL facilities.
"It will be good if there’s a push on the policy to apply a three to five-minute module for every credit card sign-up and every loan application made.
"I believe the test is important before loans are approved, to ensure borrowers fully understand effective interest rates, repayment obligations, penalties and long-term debt risks before taking on financing commitments,” he said.
Ng said the modules could be conducted digitally and integrated into loan application processes.
"We believe education has to come first, while regulation acts as the fallback mechanism.
"When consumers truly understand how debt works, they would naturally make better borrowing decisions,” he said.
At the same time, he encouraged Malaysians to build emergency savings and reserve funds early instead of relying excessively on credit facilities during financial shocks.
He also called for greater public discussion on debt-related issues to reduce stigma surrounding financial distress and encourage borrowers to seek help earlier before debts become unmanageable. - Bernama
