In March 2020, after carefully analyzing the pandemic’s effect on the nation’s economy, the Bank Negara Malaysia (BNM) decided to implement a six-month moratorium on all loan repayments. This action aimed to make the financial burden on individuals and small and medium-sized enterprises (SMEs) a little more bearable. Read ahead at what you need to know about the policies.
The Key Points Of The Moratorium
- It took effect on the 1st of April and lapsed after the 30th of September 2020.
- Interest will still be charged during this 6-month deferment timeframe.
- This policy does not cover loans or financing that are more than 90 days in arrears by the 1st of April.
- Leveraging this policy isn’t mandatory, as you can get in touch with your bank to exclude you from the moratorium if you wish.
- The moratorium doesn’t extend to credit card debt.
With so many areas of this policy still not fully understood by many Malaysians, we’ll address some common questions about the moratorium’s impact on credit scores.
Will Using This Moratorium Damage My Credit Score?
No, it won’t.
While not making payments when you would usually be harmful to your credit score, elements like a sanctioned moratorium from the BNM are exceptions to this rule. Because of this, these payments will reflect as deferred payments instead of defaulted payments on your credit history.
While I Have To Pay Interest On The Moratorium Period?
Yes, you will.
While you won’t have to pay the interest during the moratorium period, the standard interest rate you’ve been paying will also apply to the 6-month grace period. So even though you may enjoy a brief respite now, keep in mind that using the moratorium period long-term means you’ll have to pay more.
Does This Deferment Cover Credit Card Repayments?
No, it doesn’t.
Although you don’t get to benefit from the moratorium this way, depending on the type of bank you use, you still have a chance to leverage it. Some banks allow their customers to convert their credit card balances into a term loan or financing. This way, you may be able to enjoy the dividends of the moratorium.
How Do I Learn More About This Policy?
We recommend that you get in touch with your bank. It will ensure that you vet information specific to you, as these financial institutions will be able to share data more relevant to your bank account. Alternatively, you can log on to the official website of BNM and get more information directly from them as well.
Ultimately, no matter which approach you choose to take, don’t forget to check your credit scores constantly. It remains the best way to figure out if you have any financial issues. Your credit scores will instantly point those out, but it’ll also help you get the foothold you need to deal with those problems efficiently.