When spending money comes with hidden costs

I REFER to the StarBiz article, “Buku 555: The small book that held our word” (The Star, Nov 2) by Joseph Tek Choon Yee.

Having read an earlier report, “Small payments that come with big risks” (The Star, Oct 26), which highlighted the growing concerns over Buy Now, Pay Later (BNPL) schemes in Malaysia, the article provided a striking historical contrast.

As a consumer who diligently pays off my credit card balance in full every month, I initially wondered if I should switch to BNPL to avoid the “risk” of credit card debt.

But after reviewing how these schemes operate, it is clear that for disciplined spenders, BNPL is not a money-saver.

The use of Buku 555, “the humble pocket notebook familiar to generations of Malay-sians” as noted by the author, arose at a time when households needed to stretch their ringgit before pay day.

It served as a localised micro-credit system at the neighbourhood sundry shop.

Unlike the cold, algorithmic nature of today’s BNPL apps, the Buku 555 was deeply human. The shopkeeper charged zero interest and operated entirely on trust, knowing the family’s circumstances.

This is where modern BNPL fails us. For a responsible user, a credit card acts as a 30-day interest-free loan that comes with valuable cashback and strong fraud protection.

Conversely, BNPL platforms offer almost zero rewards.

While they advertise “0% interest”, hidden service fees often apply for longer terms. Furthermore, BNPL apps make it dangerously easy to “stack” multiple small debts across different platforms, making it hard to track total spending.

The government, which heavily subsidises the nation’s cost of living and social safety nets, should seriously look into the Buku 555 concept.

The principles of this old system – zero interest, flexible terms based on human connection, and accountability to one’s community – could offer a blueprint for ethical micro-financing. We need a system that helps families bridge the gap without trapping them in a cycle of debt and hidden fees.

Malaysians should focus on financial literacy. We need to understand that whether it is a plastic card, a smartphone app or a faded notebook, spending money you don’t have always comes with a cost.

PHILLIP M. RAJOO

Seremban