When debt becomes a habit

IT starts small: A smartphone bought on an instalment scheme, or a few online purchases split into easy payments, and maybe a short-term loan to get through the month.

It doesn’t feel dangerous – but over time, it can grow into an overwhelming problem. It is an issue that too many young Malaysians under 30 are facing.

The Credit Counselling and Debt Management Agency reported in October 2024 that 53,000 individuals in this age category have accumulated debt of over RM1.9bil.

Debt has become a quiet companion to young adulthood.

And it’s not always because young people are reckless; a lot of the time, it’s because credit is readily available and almost frictionless.

Getting a credit card has never been so easy – they’re practically shoved in your face. Personal loans can be secured in minutes. Buy-now-pay-later (BNPL) schemes litter online shopping platforms, presented not as debt but as convenience. And then there are those interest-free instalment schemes that make it easy for even a fresh graduate to own the latest smartphone.

Borrowing very easily becomes a part of everyday life.

Small obligations pile up, repayments overlap. Suddenly, a modest income is servicing multiple debts and eventually comes crashing down under their weight.

Financial literacy is supposed to be the first line of defence. But we don’t treat it seriously enough. Mathematics and accounting are taught at school, but neither teaches how compound interest works in real life.

Many young adults sign loan agreements without understanding the fine print, penalties, rollover costs or what happens when repayments are missed.

This is not really about a moral failure, it’s about a policy failure.

The credit industry has moved faster than regulation. Fintech plat­forms, BNPL providers and non-bank lenders operate in a grey area that did not exist a decade ago.

They are attractive, innovative, efficient and profitable. And they are built on volume.

This is why the Consumer Cre­dit Act cannot come soon enough. It passed through Parliament this year, and we are hoping it will be gazetted into law in 2026.

But we can’t depend on just that one law. We must do more to ensure young people understand finances better.

The government must play a more active role in educating the public on financial literacy rather than promoting it through brochures or one-off campaigns.

Perhaps it could be introduced as a special subject for those about to leave school, to send a clear message about the realities of life.

This should include the practicality of budgeting on a real salary, managing multiple financial obligations and understanding what happens when debts snowball. And most importantly, it must address the dangers of living beyond one’s means.

This is by no means a personal issue as it most certainly impacts the economy. High debt at a young age delays home ownership, family formation and long-term financial resilience. More importantly, it breeds quiet despair.

No, young Malaysians shouldn’t be protected from responsibility. But we must at least ensure the system isn’t designed to profit from their inexperience, that debt isn’t disguised as lifestyle.

Credit is necessary, but it has to be offered honestly, with restraint, and its penalties widely understood.