Buy Now Pay Later (BNPL) can also be financially dangerous – kopiandproperty.com

Personal Finance 101: Buy Now Pay Later (BNPL) can also be financially dangerous

Spending tomorrow’s money today

Debts can be good or bad. We take up debt because we may want to buy something which is just too expensive to buy by cash. For example, a property or a car. Okay, maybe also a handbag… or maybe a pair of shoes… or anything these days. Buy Now Pay Later (BNPL) is these days very common. Whether online shopping or even shopping at the mall, we could turn our purchase into a BNPL scheme. In other words, instead of paying for it now, maybe we pay for it over 3 payments, maybe over certain period of time etc.

Maybe this is still at its infancy versus the credit card which has always been used as another BNPL way for a very long time. This is why some of my friends refuse to have a credit card and prefers to have a debit card instead. They want to spend only money they have.

What’s happening for BNPL here in Malaysia?

Article in theborneopost.com KUALA LUMPUR (June 21): The rapid growth of “buy now, pay later” (BNPL) schemes here has moved Bank Negara Malaysia to directly regulate the industry, with proposed laws to increase consumer protection against the risks of unfettered borrowing.

Today, over one in 10 Malaysians count as active users, having made at least one BNPL transaction in the previous 12 months.

“We (BNM) felt the need to ensure all financial service providers (FSP) including banks that their consumers are treated and given assurance, subjected to the same level of fair treatment regardless of entities they choose to get their loan from,” BNM’s director of consumer and market conduct Lim Hsin Ying told Malay Mail in an interview recently.

“BNPL is good for those not having a credit history and want to build one but given its nature, as we have seen elsewhere as well it can also be a tool that tempts you to overspend because it is so easy to access.

“As regulators, we do not dictate the good or bad but what we can ensure is ‘fine, if you want to give easy credit which can benefit society, you have to play within a certain set of rules’, but we cannot impose these rules if you are not under anyone’s regulation.” Please do read the full article here: Article in theborneopost.com

Regulations are always necessary to protect everyone, not just the ones taking BNPL

Please note that if too many people take up BNPL and instead of paying, they start to default in droves, then this will impact the whole market. I do not wish for any domino effects from anything which is not due to my fault yeah. When we borrow within our means, we do not wish the industry to start tightening up due to the higher costs from losses and in the end, the one who benefited may just be the ones who have bought something and enjoyed it while all the rest of the people may also experience effects despite doing everything within their financial means yeah.

Let’s not forget how the Mortgage Crisis started in the US yeah. Just a few banks trying to earn exceptional profits will cause the whole industry to suffer. Let’s hope that this would soon come into fruition. Seems that the Prime Minister will be tabling this during the second half of this year when Parliament convenes for its Third Meeting from October 14 to December 12. Let’s wait and see what happens.

In the mean time please buy within our means. Thanks.

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