Borrow First, Budget Later’ Culture Grows

In the first quarter of 2025, a significant uptick was observed in credit card issuance. One demographic segment accounted for nearly a third of all new credit card holders, reflecting both an aggressive push by issuers and a surge in first-time earners entering the formal economy. Total credit extended to this segment crossed RM 2.4 billion, with the average initial credit limit ranging from RM 4,000 to RM 8,000, often disconnected from actual disposable income levels.

While established professionals typically receive credit limits proportional to their verified incomes and spending histories, many first-time cardholders are extended generous limits without rigorous checks. Banks offer fast-tracked approvals to youth through strategic tie-ups. The documentation required is minimal.

Yet, this financial access comes at a cost. Among cardholders under the age of 30, credit utilisation rates hover at a concerning 62%, significantly higher than the 37% average observed among older, more established borrowers. Delinquency rates too are disproportionately skewed—young borrowers are twice as likely to miss a repayment deadline within the first year of card ownership compared to the broader population. In many cases, this leads to rolling over balances, accumulating interest, and slipping into a cycle of debt.

A closer look at the demographics of these borrowers reveals important trends. Young professionals from the IT and services sectors—those earning between RM 3,000 and RM 5,500—constitute the bulk of new card recipients. Most reside in urban centres like Kuala Lumpur, George Town, and Johor Bahru, where the cost of living is higher and the pressure to maintain a certain lifestyle is acute.

Graduates from business, communications, and hospitality streams tend to rely more heavily on credit cards for discretionary spending—travel, gadgets, fashion—while engineering and medical graduates show slightly more conservative usage, though still not immune to debt accumulation.

The marketing strategies employed to lure this group are both sophisticated and relentless. Cashback campaigns target online spending and food delivery—staples in the average urban graduate’s monthly budget. Limited-time offers, shopping festival tie-ins, and no-interest instalment plans for electronics or apparel play directly into youth consumption patterns. With social media influencers normalising this culture, many graduates swipe first and budget later—if at all.

But the deeper issue lies not only in bank strategies but also in the readiness of young people to manage credit. Many enter the workforce with little to no financial education. Budgeting, debt servicing, and understanding compounding interest are rarely taught in schools or universities. As a result, the decision to carry a revolving balance or skip a payment is often made in ignorance rather than neglect. A large number of young borrowers mistake credit card limits as extensions of their salary rather than debt obligations.

Peer pressure plays a significant role too. A number of young cardholders admit to feeling left out or inadequate without the spending capacity that cards afford, especially during group purchases or shared experiences.

The consequences are tangible. Missed payments damage credit scores, reducing future access to responsible borrowing options such as housing loans. Many find themselves taking out personal loans to repay card debts, compounding interest burdens. A few turn to informal borrowing, placing themselves at greater financial and emotional risk.