Kuala Lumpur: The Credit Counselling and Debt Management Agency (AKPK) has introduced the 3P formula – Purpose, Payment Capacity, and Payment History – to guide individuals in making responsible credit decisions, particularly in short-term financing like Buy Now Pay Later (BNPL). AKPK, in a statement today, emphasised that the agency is committed to empowering individuals with the knowledge and tools to manage their finances responsibly, besides helping them evaluate their financial capacity and avoid excessive debt.
According to BERNAMA News Agency, AKPK highlights the importance of borrowing for beneficial and sustainable purposes, ensuring that borrowing aligns with long-term benefits rather than temporary desires. The agency advises individuals to borrow according to their actual affordability, rather than relying solely on eligibility offered by financial institutions or BNPL schemes. Critical questions like “How long is the repayment period?” and “Is my income stable throughout the credit term?” are essential in assessing debt manageability. Individuals should evaluate their income, expenses, and existing debt obligations to determine their ability to repay before using BNPL schemes.
Regarding Payment History, AKPK stresses the importance of maintaining a solid repayment record. Meeting payment obligations promptly and avoiding warnings from credit providers is crucial for securing favourable financing terms. The agency acknowledges the potential risks associated with BNPL, where the ease of purchase can obscure long-term financial implications.
Finance Minister II Datuk Seri Amir Hamzah Azizan informed the Dewan Rakyat of a nearly 45 per cent surge in BNPL transactions within just six months from the first half to the second half of 2024. Commenting on this trend, AKPK’s CEO Azaddin Ngah Tasir noted that AKPK’s research revealed that three out of ten consumers, especially those under 40, exhibited compulsive spending habits and experienced higher financial distress. This observation aligns with AKPK’s research on money and mental health, indicating that individuals below 40 are more susceptible to financial distress compared to older age groups.
AKPK advises using BNPL only if individuals can meet all deadlines to avoid late fees, interest charges, penalties for non-payment, and compounding costs. The agency also provides financial advisory services to assist with budgeting, debt management, and navigating BNPL complexities. Additionally, AKPK offers free financial education, including online modules, and provides the book, ‘Realising Potential! Unleashing Your Financial Potential’, to help individuals make informed decisions and navigate their financial lives.