Finance minister II Amir Hamzah Azizan said the agency also found that 28% of working adults have borrowed money to purchase essential goods.

“The growing accessibility of personal loans, credit cards and especially ‘buy now, pay later’ schemes is particularly worrying, especially among young adults.

“While these tools may offer convenience, a lack of understanding of their implications and discipline in managing commitments can quickly lead to unmanageable debt,” he said here today.

He noted that according to the Organisation for Economic Cooperation and Development’s (OECD) financial literacy survey, only 36% of Malaysians understand basic financial concepts such as interest rates, inflation and risk diversification.

This figure falls below the global average of 42%, positioning Malaysia 26th out of 39 countries surveyed.

Amir said as of 2023, household debt had reached RM1.53 trillion, equivalent to 84.2% of gross domestic product, one of the highest ratios in the region.

“This alarming figure indicates that households are increasingly relying on credit to finance their lifestyles and investments.

“If not carefully managed, such levels of debt can lead to long-term financial strain, reinforcing the critical role financial literacy plays in safeguarding financial health,” he said.