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Moratorium – No compound interest and no interest are two different things yeah.

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Moratorium is back. Yes, we can conclude the economy is not well.

Yesterday, a good friend asked this question, “If I apply for moratorium, it means for 6 months I do not need to pay anything and the bank would not charge me any interest, right?” He asked me this before Finance Minister Tengku Zafrul explained to all the media today. I told him that it is highly unlikely for the bank not to charge any interest for 6 months.

Today, he sent me an article in malaymail.com here: Finance minister: Banks to waive compounded interest, penalty charges over moratorium. He told me that there was no mention about the interest, so means the banks will waive? I told him to let me read a few more articles and also to reconfirm before I respond. I read two other articles. One from thestar.com.my (click here to read) and another from nst.com.my (click here to read)

The other two medias with an additional statement

Both the writers in these two media sites has these inside their article too. The Star: “The latest loan moratorium under the RM150bil Pemulih package will not be interest free, but it would help borrowers by deferring the repayment to a later date.” NST: “The loan moratorium announced under the RM150 billion Pemulih stimulus package will not be interest free” In other words, both these said the same thing as me. There will be interest charged for the moratorium.

Huge difference between no interest and no compounded interest

However, there will be no compounded interest and late charges. This is confirmed by all the media I read today, after my good friend alerted me. Remember yeah, there’s a super huge difference between no interest and no compound interest. My good friend has yet to give up. He said that his banker friend told him that there is likely to be an announcement tomorrow or within the next few days. I told him, “I wish him all the best.” As for me, I am sticking to my belief yeah. We should also be fair to the banks’ shareholders too.

Moratorium is NOT supposed to be blanket

I also told my good friend that from before and even until now, I disagree with blanket moratorium. It should be targeted at those needing it and not everyone. The reason is a simple one. The moratorium is NOT free. The one who got approval for moratorium will still have to pay for it in the future.

Plus the fact that the banks are already approving applications for moratorium extension earlier with valid reasons already, why must we give to everyone whether or not they need it? Because of the pressure from some people (mostly political figures) who kept suggesting it without wanting to know why even Bank Negara Malaysia (read the article here) and Finance Minister is against it? (click here to read his argument)

Whatever has happened, just let it be

Since it’s now a blanket moratorium and as long as anyone applies for it, they will get approval, then so be it. Let it be then. Just a final reminder yeah. The Moratorium savings should be used properly and not be used to buy things indiscriminately. I guess it’s very hard to do. Surely those who could afford to continue paying may also apply and with the extra money, the itchiness to buy will be very tempting. All the best.

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Next suggested article:  6 months moratorium returns, should I go for it?

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