Can’t Afford Credit Card Payments in Malaysia? What to Do

Key Takeaways

If you can’t afford credit card payments in Malaysia, you will face some serious consequences.

Steps to take when you can’t afford credit card payments:

Can’t afford credit card payments in Malaysia? With rising living costs and unexpected financial challenges, it’s easy to find yourself in a tight spot.

But don’t worry; you’re not alone, and there are many steps you can take to manage your debt and get back on track.

In this article, we’ll explore effective strategies and expert advice to help you navigate these tough times and regain control of your finances.

Let’s dive in and find the best solutions for your situation!

What Happens if You Can’t Afford Credit Card Payments in Malaysia?


1. Immediate Consequences

a. Late Payment Fees

When you can’t afford credit card payments in Malaysia, one of the first repercussions is late payment fees.

These fees can be substantial, usually starting at RM10 or 1% of the outstanding balance (whichever is higher), with a maximum cap of RM100 per statement.

This additional cost can quickly add up, compounding your financial difficulties.


b. Interest Rate Hike

Missing a payment may also trigger a penalty interest rate on your outstanding balance.

This higher interest rate increases your overall debt due to compounded interest, making it even harder to pay off your balance.


c. Negative Credit Rating Impact

Late or missed payments are reported to Malaysian credit bureaus, including the Central Credit Reference Information System (CCRIS).

A low credit score can make obtaining approval for future loans or credit cards challenging and may lead to higher interest rates even if you are approved.


2. Further Consequences (If Unresolved)

a. Collection Calls and Letters

If your overdue payments remain unresolved, your bank will begin contacting you through phone calls and letters in an attempt to collect the overdue amount.

This can be a stressful and persistent reminder of your financial obligations.


b. Card Suspension

Continued missed payments can lead to your credit card being suspended.

You will no longer be able to use your card until you settle the outstanding balance, limiting your access to credit.


c. Negative Impact on Credit Report

Persistently deferring or failing to pay your credit card debt results in a negative mark on your credit report. These reports are accessible to all banks via the CCRIS and are linked to Bank Negara Malaysia.

A poor credit history can lead to being blacklisted by banks, severely impacting your future borrowing capabilities.

This can make it difficult to secure a mortgage, buy a house, purchase a new car, or obtain a personal loan.


d. Interest & Fees Accumulation

The interest rate on overdue amounts can be quite high, significantly increasing the total amount you owe. 

If you have a savings account with the same bank as your credit card, the bank may be able to auto-debit the due amount from your savings account.

It’s essential to check your bank’s specific policies regarding this. In some cases, banks may freeze your savings accounts and prevent you from transferring funds, further complicating your financial situation.


e. Risk of Bankruptcy

Lastly, banks may eventually resort to legal action if you can’t afford credit card payments.

In Malaysia, being declared bankrupt occurs when your total debts reach or exceed RM100,000.

For instance, if you have an RM30,000 credit card debt and an RM80,000 personal loan, the bank can file for bankruptcy against you.

Once declared bankrupt, a Director General Insolvency (DGI) will be appointed to liquidate your assets to settle your debts.

Additionally, your passport will be held by the DGI, barring you from leaving Malaysia.

Understanding these consequences highlights the importance of addressing credit card debt promptly to avoid further financial distress.


What to Do When You Can’t Pay Your Credit Card in Malaysia?

1. Contact Your Bank

If you can’t afford credit card payments, the first step is to communicate with your bank as soon as possible. Transparency is key. 

Explain your situation honestly and explore the options they might offer, such as:


2. Debt Consolidation

Another effective strategy when you can’t afford credit card payments is debt consolidation.

This involves combining all your credit card debt into a single loan with a potentially lower interest rate.

Not only does this simplify your repayment process, but it can also save you money on interest charges.


3. Debt Management Programme (DMP)

Consider enrolling in a Debt Management Programme offered by Agensi Kaunseling dan Pengurusan Kredit (AKPK), a government agency.

AKPK can negotiate with your creditors to secure lower interest rates and develop a repayment strategy tailored to your financial situation.


4. Settle Your Payments Promptly

Even if you can’t pay the full amount, making prompt payments can still be beneficial.

Payments made after the due date will not avoid late fees, but they will reduce your principal balance, decreasing overall interest charges.

Moreover, paying more than the minimum can have a significant impact since payments are applied to the highest interest rates first.

Small payments can also help you avoid full delinquency and keep open lines of communication with your card issuer.


5. Develop a Debt Reduction Strategy

Re-evaluate your budget and use payment calculators to determine how long it will take to clear your debt with affordable payments.

You may need to make tough lifestyle adjustments or consult a credit counsellor to achieve financial recovery.

To prevent further debt, refrain from making new purchases on your credit card and use cash or a debit card instead.


6. Try Credit Card Balance Transfers

Moving a high-interest credit card balance to a new card with low or no interest can accelerate your debt repayment.

However, this typically requires a good credit rating, making it less accessible for those with poor credit.

Be aware that most issuers charge a 2 to 3% fee on the transferred amount, which can reduce your expected savings.

After transferring a balance, it’s wise to cut up the old credit card and close the account to avoid accumulating more debt.

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Our goal is simple: to help you find the right loan solution, paving the way to financial stability and debt freedom.


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