PETALING JAYA, July 14 — Lower interest rates will help Malaysians cope with the high cost of living with savings from new and existing loan repayments, say consumer groups.
They welcomed Bank Negara Malaysia’s surprise announcement yesterday lowering the key benchmark interest rate or the Overnight Policy Rate (OPR) to three per cent from 3.25 per cent — the first time in seven years, saying it would not only ease consumers’ financial burden but also boost the economy.
Malaysian Consumer Association secretary-general Datuk Amarjit Singh Gill said the move would allow consumers to have more cash in hand.
“It will boost spending which will spur our economy,” he said.
Malaysian Consumer Protection and Welfare Board president Datuk Seri Dr Saharuddin Awang concurred that the reduced rate would give consumers some extra money as most of them spend a large portion of their salaries on loan repayments.
“Credit card, car, housing and personal loan repayments are eating up our monthly salaries due to the high interest rate. With the reduction, consumers will be able to put the extra money into good use like savings or investments,” he said.
He, however, advised consumers to be wise and not take advantage of the situation by spending recklessly as the economic situation was still unstable.
“The rate reduction should not encourage reckless spending. When using a credit card, for instance, consumers must bear in mind the amount charged to the card still needs to be paid by the end of the month, even though the interest rate is lower,” he said.
Federation of Malaysian Consumers Association, however, was more cautious.
Its secretary-general Datuk Paul Selvaraj said while they welcome the move, it would not be beneficial if consumers lacked financial management skills.
“Not enough is being done on financial education. We need to empower consumers to manage their finances properly,” he said.
“Without strong financial knowledge and skill, the benefit (lower interest rates) will not fulfill consumers’ immediate and long-term needs.”
Muslim Consumers Association of Malaysia president Datuk Nadzim Johan said the long-awaited move might change consumer’s existing perception on financial institutions.
“When people think of banks, they think of a rigid environment, especially in the current economy. Applying for loans is a tedious process and paying them is an even harder exercise,” he said.
Nadzim said while the decision only affected those with loans, it showed the government was walking the talk to improve the public’s financial status.
