Many Malaysians have been receiving calls and text messages from banks this past couple of months. The purpose of these contacts is to remind us that this month, the six-month moratorium on bank loans will end. Yes, the aid in response to the new normal was introduced in April and ends in September 2020.
Debt seems like a normal part of modern life in Malaysia. In parliament last year, we were told that our household debt to Gross Domestic Product (GDP) stood at 83.2 per cent. As for comparisons, the same ratio for Italy is 40 per cent, Japan 58 per cent, and the United States 76 per cent.
What strategies can I use to pay off my debt?
Everyone has debt, it’s how we reduce and manage it that sets us apart. When it comes to methods of debt reduction, there are many options to consider. Here are three common strategies:
- Snowballing method — you list all of your debts in order of smallest to the highest dollar amount. You use any extra money to pay off the smallest balance while only paying the minimums on the others.
- Avalanche method — you list your debts in order of highest to lowest interest rate, regardless of the dollar amount of the debt. You throw as much money as you can at the debt with the highest rate of interest. Also known as debt stacking.
- Debt consolidation – out a single loan for the total amount of the debt you want to repay. You take the borrowed money from the new loan and repay all the individual loans with balances you already had.
Debt consolidation may be the solution to help reduce your debt woes!
We all have multiple bills to pay but debt usually accumulates through loans and credit cards. Debt consolidation and balance transfer (for credit cards) might be the best solution to help ease your burden.
This is a good option if you’re feeling overwhelmed because it simplifies your financial situation. It involves taking out a new loan to pay off multiple debts or credit card balances. You are borrowing money at a low-interest rate to pay off loans or credit cards which are at a higher interest rate. This helps you save you money and pay off the debt sooner.
Here some advantages of debt consolidation:
- Single payment deadline
- Lower Interest Rate
- Less Risk of Collateral Repossession
- Having a Regular Fixed Payment Amount
- Less Monthly Expenditure Gone to Debt Repayment
- Can Improve Credit Score
Debt consolidation gives you even more benefits with this one trick!
Want to earn more benefits? Then follow this one simple trick — choose an Islamic financing or Islamic credit card transfer balance over the conventional option!
Islamic banking is a system that follows Islamic Laws (Shariah) principles and Islamic-based economics. Money lending (interest-based) as well as investing in businesses are among the prohibited elements. Other reasons for its rise in popularity include:
- Fairness and protection from high risks
- Safe from crisis
- Fixed and clear fees
- Lower penalties
According to a 2017 report by Bank Negara, Islamic financing in this country now accounts for 34.9 per cent of total loans and financing. Compare that, if you will, to the 5.3 per cent market share it enjoyed in 2000.
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