Credit and debt
Credit means buying now and paying later. Debt is money you owe and must pay back. Borrowing can help when you really need something, but you must always pay it back, and often with an extra charge on top. That is why we should borrow carefully and only when it is truly needed.
Worked example
Encik Rahman borrows RM100 and must pay back the RM100 plus a RM5 charge.
Total to repay = RM100 + RM5 = RM105.
Paying back debt
To clear a debt, pay some each time until it reaches zero. If you owe RM200 and pay RM40 each month (no extra charge):
RM200 ÷ RM40 = 5 months to be debt-free. Paying a fixed amount every month makes a big debt easy to manage.
Key idea
Amount still owed = total debt − amount already paid. Paying on time avoids extra charges.
Remember
- Only borrow what you can pay back.
- Pay on time to avoid extra charges.
- Spend within what you have.