A TOTAL of 5,272 youths aged 34 and under have been declared bankrupt between 2020 and 2025, accounting for 14.94% of all bankruptcy cases in the country.
According to Youth and Sports Minister Hannah Yeoh, 5,189 of them were between the ages of 25 and 34 while 83 were under 25.
Based on these statistics, the growing accessibility of buy now, pay later (BNPL) services is concerning as it could further increase bankruptcy among young adults, especially if they are not properly educated about its risks and financial responsibilities.
BNPL is especially popular among young, tech-savvy users due to its easy accessibility and the appeal of interest-free instalment payments.
Research by the Consumer Credit Oversight Board Task Force, a government agency, found that 2.9 million Malaysians are active BNPL users in the country, with 44% aged between 21 and 30.
Unsurprisingly, the easy accessibility of BNPL has led many users to struggle with repayments as their deferred spending continues to rise. With each instalment payment missed, the penalty can range from RM10 to RM50.
This constant habit of using BNPL, especially among impulsive individuals, can be financially damaging as it can lead users into repeated cycles of debt.
For those with poor control over their spending habits, it is easy to lose track and take on more than they can afford to repay. This can lead to missed instalment payments, late penalties and mounting debt that continues to grow.
On the flip side, it is undeniable that BNPL has also helped many from the lower income group, with data from Bank Negara Malaysia showing that 80% of users earn less than RM3,000 per month.
This can be a lifeline for some users who need to resort to BNPL to afford essential items such as milk powder, diapers and groceries.
However, while BNPL can provide temporary relief for urgent needs, it remains a tool that must be used with caution. What starts as a necessity can easily become a habit, especially when the line between essentials and non-essentials becomes blurred.
At the end of the day, as with most things, moderation is key.
It is important that education institutions such as universities hold campaigns to educate students about the benefits and harm of BNPL to encourage greater financial responsibility among young adults.
Darren Ong Wei Shen
City University
Cyberjaya
