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How to Choose the Best Credit Card for Yourself

There is no single best card in Malaysia for everyone. What is considered the “best” will vary from person to person, which is why in this guide we will discuss the different ‘persona’s’, with different needs in order to help you find the right credit card for you.There are several credit card types offering various features such as reward programs, cashback, air miles, balance transfer, and exclusive privileges such as premium deals, access to the premium lounges in the airport, and unlimited spending limits.In addition to better understanding the benefits you will enjoy as a cardholder, there are several other factors you need to consider when choosing a credit card. Starting from card features to suit your needs, the application process and document requirements, of which you can find out more in the sections below.

What to Look Out for When Choosing a Card

1. Effective Interest Rate (EIR)

Banks always advertise annual percentage rates (APR) to its customers. However, the effective interest rate represents the true economic cost of carrying a credit card. A credit card is one of the financing options that come with the highest costs. With EIRs ranging from 12% to 16% in Malaysia, it is important to find out the EIR of the credit card offered by banks which will be the interest rate charged to your outstanding credit card balance.However, most people can avoid paying the high costs if they manage to pay the outstanding amount every month.

2. Annual fee

Other than APR, some banks charge an annual fee to credit card holders which can be as high as RM800 per annum. Before applying for a new card, you should understand your financing appetite and see if there is another similar credit card offering a lower fee, or better yet, zero annual fees. The range of annual fee for credit cards in Malaysia is between RM100 to RM800.Some banks offer annual fee waivers for certain credit cards and you should take this into consideration when it comes to choosing a credit card, to minimize your cost of applying for one.

3. Other charges

Always read the fine print to discover if there are any additional charges that could be imposed by the bank such as a foreign transaction fee, dynamic currency conversion, cash advance fee, balance transfer fee, and late payment fee.
  • Foreign Transaction Fee: 1% (This applies to most of the cards in Malaysia but you can check with your bank to get a confirmation at any time.)
  • Dynamic Currency Conversion: 1% and conversion charges. (Depending on banks)
  • Cash Advance Fee: Based on the effective interest rate (EIR), which will be charged to your credit card. However, some do offer low rates for cash advance option. (It is best to contact the banks for the latest promotion on cash advance.)
  • Balance Transfer Fee: From 0% to 6% in Malaysia.
  • Late Payment Fee: If the minimum payment is not made by the payment due date, a late payment charge will be charged at 1% of the outstanding debts. (Depending on banks)

4. Minimum income requirement

Before approving your credit card application, banks will need to know your income level. Minimum annual income requirement in Malaysia for a basic credit card is RM24,000, in general. Be sure to check if you meet the minimum income requirement before applying for your credit card. Overall, it is safe to say that you can apply for more than half of credit cards offered in Malaysia if your annual salary is between RM24,000 to RM36,000.

5. Credit Score

You need to make sure your credit score is at a healthy level with your debt-to-income ratio not exceeding 40% to improve chances of getting your credit card application approved. Generally, you can check your credit score from CCRIS (Bank Negara), CTOS Credit Rating agency and RAM Credit Rating Sdn Bhd.

6. Cashback Benefit

Credit cards that come with cashback features would require you to comply with several terms and conditions. First, you need to spend a minimum amount every month in order to be eligible for the maximum cashback rate offered by the banks. Next, you need to look at the maximum cap of cashback (rates) as some banks may impose this to certain credit cards. Then, you should carefully look at the categories of spending that are entitled to cashback features.

7. Reward Points Benefit

Just like cashback credit cards, there are different tiers for the amount of rewards points that you can earn based on the spending category. To compare the best rewards credit cards, you should consider the options of rewards offered by the banks such as retail products, services and vouchers. Most importantly, you should find out the rewards to cash (spending) ratio and the one that allows you to redeem for your rewards the fastest!

Twelve Types of Credit Card Users in Malaysia and Credit Cards That Suit Them

 12-credit-card-usersIn order to pick the right card for yourself, we’ll help you understand the kind of spender or credit card user you are. We have listed the twelve common types of spenders in Malaysia and the best credit card that suits their needs.1. First-Time Credit Card HoldersYou are a fresh graduate or entry-level executive who just found your first job and you are looking to apply for your first credit card. You are not entirely sure about the different type of credit card features and how a credit card works for you. However, you wish to have a card that offers great savings at minimal costs and you are really excited to start enjoying your life with more financing flexibility.It can be hard for you to get your first credit card given you might not have a credit history. However, you can apply for a no annual fee credit card offered by many banks, specially designed for fresh graduates and you can use it for emergencies in the future.Recommended card types for you: CashbackNo Annual Fee

2. Fashionista/Lifestyle Indulger

You look forward to enjoying the best in your life with exclusive deals and you love to spend your time scouting for the best dress and shoes anytime, anywhere. Most importantly, you want to be able to earn rewards or cashback from your spending and enjoy more savings at the end of the year or month!Like the new UOB Lady Card, you can enjoy 10% cashback for your weekend shopping and earn 10 X UNIRIGGIT points through its reward program, both with just one card!Recommended card types for you: CashbackRewards

3. Housewife or Stay-At-Home Dads

If you are doing the house chores and grocery shopping for your family, you are definitely one of the super moms or super dads. There are a few cards that allow you to enjoy unlimited savings and exclusive deals from time to time at the lowest cost possible.If you prefer to save more than using cash, you should know that there are several credit cards that offer great savings for grocery shopping such as Alliance Bank You:nique credit card that offers 3% cashback rate without minimum spending or monthly cashback cap.Recommended card types for you: CashbackRewardsNo annual fee

4. Online Shopper

You find that most of the best deals are available online and you prefer to skip the queue to get your favourite stuff by using a laptop or smartphone. On top of that, you love to enjoy exclusive deals with a credit card or two. Let’s face it, we are all becoming online shoppers whether we realise it or not.If you want to save more from your next online shopping routine, RHB Islamic Smart Value-I offers a maximum 5% cashback for online shopping, or UOB VOX Visa offers 5% cash rebate for online spending with a minimum spend of RM50 in a single receipt. These are some of the great credit cards for you!Recommended card types for you: CashbackRewardsIslamic

5. Islamic card user

Whether you are Muslim or non-Muslim, if you believe in Shariah-compliant financing options, you are most likely to use an Islamic credit card which functions similarly to a conventional credit card but with some slight differences in the offered features. One of the differences in Islamic credit card is the replacement of the interest rate with a profit charge.Recommended card type for you: Islamic

6. Traveller

You love to travel and see the world with your own eyes. With a card that fits your needs, you can earn air miles and redeem free flight tickets while enjoying exclusive deals such as free travel insurance and access to plaza premium lounges on your next holiday.If you choose the right card, you just might land yourself free travel insurance and unlimited access to premium plaza lounges at KLIA by buying a flight ticket with the card such as AmBank Platinum credit card.Recommended card types for you: AirmilesRewards

7. Full-Time Driver

Whether you are an Uber or Grab driver, or you are frequently in the driver seat going from one destination to another, you have one single goal and that is to save on fuel consumption. A card that allows you to save money when you fill up petrol is a lifesaver.Driving in Malaysia can be stressful from time to time because of the uncertain fuel prices. However, you can find some relief and save yourself some extra ringgit by using the right credit card with great cashback rates for petrol such as Shell-Citi Gold Credit Card that offers cashback as high as 8% if you spend RM2,500 and above in your total monthly spending (including petrol, dining, groceries, utilities, and traveling.)Recommended card type for you: Cashback

8. For Emergencies Only

Not really a believer in a credit card and find that you prefer to spend with cash? You are one of the many Malaysians who keeps a credit card as the last resort to solve your financing needs such as debt consolidation or cash advance.Given the fact that you are not able to anticipate the exact time you will need to use the card, you should apply for a no-annual-fee credit card to minimise your cost of owning one.Recommended card types for you: No annual fee

9. Premium Lifestyle Believers

You believe in getting the best out of each Ringgit you spend and love to have the privilege to use the credit card to buy what the world has to offer. You don’t mind paying more to get better value for services and goods.For example, Cynthia earns RM10,000 per month and she is looking for a card that offers the best of everything for rewards, cashback rates and airmiles programs. Well, Citi Rewards Visa Signature can be a great credit card option for Cynthia with 5 X Citi Rewards Points for spending in selected merchants which do not expire!Recommended card type for you: Best Deals

10. Business Traveler

You are a busy corporate person with a job that requires you to fly around the world for your business or company. You want a seamless travel experience and hope to have the best out of every trip with comfortable flights and cosy accommodation.For example, HSBC Visa Signature’s reward program offers air miles conversion of 3,000 Rewards Points to 1,000 Air Miles for its users. With unlimited access to the premium lounge in KLIA, Singapore Changi Airport & Hong Kong International Airport and up to RM750,000 travel insurance, this card is welcomed by many business travellers in Malaysia!Recommended card types for you: Best DealsAirmiles

11. Entrepreneur

You are an owner of an emerging company and you need flexible financing options for both yourself and your employees to run the business with supplementary cards. On top of that, you wish to keep track of all expenses and put a limit on each card to ease your business finance management.Most importantly, you will want to leverage on the cashback benefit offered by some credit cards to optimise every ringgit spent for your business. For example, the Standard Chartered JustOne Platinum Mastercard that offers a maximum 15% cashback rate, you can easily save up to RM1,000 a year by using this card to spend for some of your business expenses!Recommended card types for you: Business, Cashback

12. Company Cards

You are the owner or admin & finance manager of a company that issues a credit card to your employees. Integrated with your company’s account, you can easily track all the expenses and manage your company’s financial position.Recommended card type for you: Corporate

How to Apply for a Credit Card

There are five main ways to apply for a credit card in Malaysia and the card approval process usually lasts between one to two months. Banks will screen your personal details, credit ratings, legal cases, payment history, and other relevant financial information before issuing a credit card to you.

Five Ways to Apply for a Credit Card

1. The bank’s website

You can apply for a credit card from any bank’s website if you already know your preferred product or have a preferred provider in mind. It is easier to get your application approved from a bank which you have an existing saving or current account with because the bank can easily track your cash flow and verify your information.

2. Walk into a branch

You can choose to walk into any bank branch nearby your area and fill up the form to apply for a credit card. You will need to bring your identity card and required documents including three months’ income statement (pay slip), EPF statement (latest and previous year) and also three months bank statement.

3. Comparison sites like CompareHero.my

You can easily search, compare and apply for your preferred credit card at any time by using a laptop or smartphone. Comparison sites like CompareHero.my have a team of excellent customer service heroes that will help you gather all required documents and guide you through the process of getting your favourite credit card.

4. Credit card agents

You can find credit card agents at most of the shopping malls, supermarkets, office areas, and even public transportation stations. However, it might be hard for you to compare and choose the best credit cards given the short period of time to communicate with these agents. Despite so, many banks offer freebies such as luggage bags and soft toys for those who sign up for a credit card with these agents.

5. Call centers

You can call the bank’s hotline to apply for a credit card and ask for the consultant or assistant’s work email address to send over your confidential documents. Sometimes, your banks may call you to ask if you are interested in applying for certain credit cards from time to time.

Type of Credit Card Applicants and Required Documents

Recognising that there are different types of applicants who are looking for a credit card with various backgrounds, the banks have tailored requirements for each group of applicants. Here is what you need to know:

1. Fresh Graduates

If you are a fresh graduate who has not found a job, you are not eligible to apply for a credit card until you have found one and have at least three months of salary. It will be even better if you can offer a copy of the confirmation letter from your employer to the bank.

2. Employed Executive

From entry-level to director in a company, you can apply for a credit card as long as you achieve the minimum income level required by the bank. To apply, you need to prepare the following documents:
  • Photocopy of identity card (front and back)
  • Latest EPF statement OR;
  • Latest full set BE & tax payment receipt OR;
  • Latest EA (last two years to include bonus) OR;
  • Latest salary slip
For those who earn commission, overtime, or allowance with a fixed salary, you need to prepare the following documents before applying for a credit card:
  • Photocopy of identity card (front and back)
  • Latest three months EPF statement OR;
  • Latest three months bank statement (salary credited) OR;
  • Latest full set BE form & tax payment receipt OR;
  • Latest EA form OR;
  • Latest three-month salary slip
For those who earn solely on commission such as sales agent, you need to prepare the following documents:
  • Photocopy of identity card (front and back)
  • Latest six months commission statement OR;
  • Latest full set BE & tax payment receipt OR;
  • Latest annual commission statement (CP58)

3. Own business/Self-employed/Freelancer

For those own their business and wish to apply for a credit card, you need to have a different set of documents to be eligible. On that note, freelancers may need to register their service as a sole business in order to improve their chances of getting a credit card or loan in the future.Here are the documents you will need:
  • Photocopy of identity card (front and back)
  • Latest six months company bank statement OR latest full set Borang BE or B & payment tax receipt
  • Form A (sole prop) / Form B (partnership) / Form 9, 24 & 49 (company) (issued by SuruhanJaya Syarikat Malaysia)

4. Government servant

For those who work in the public sector, you will these documents to apply for a credit card:
  • Photocopy of identity card (front and back)
  • Latest one-month salary slip OR
  • Employer confirmation letter
However, some banks may view applications from public servants the same as an employed applicant and request for three months of salary slip, bank statements, and latest EPF statement.

5. Retiree

The retiree is not allowed to apply for a credit card unless he or she continues to run a business. In that case, you can refer to the column above for required documents to apply for a credit card.

6. Unemployed

Unemployed or retrenched individuals are not allowed to apply for a credit card in Malaysia until you have worked in your next job for at least six months with necessary documents to apply as an employed individual.

7. Expat in Malaysia

On average, foreigners working in Malaysia need to have visa validity of at least six months and a minimum income of RM10,000 per month. (Some banks may set this as high as RM20,000 and 12-month visa validity but it still depends on the credit card applied.)Here are the documents you need to apply as an expat in Malaysia:
  • Photocopy of passport & Visa
  • Latest two months’ salary slip
  • Work permit valid for at least six months at the time of application
  • Letter of employment
In general, expect as an expat that the credit criteria will be much higher and the banks have much more discretion in choosing whether or not to accept you.

8. Working Abroad

The income level requirements may differ across banks as some may factor in foreign currency exchange while others may not. It is still safe to say that you should earn at least RM24,000 of annual income in order to qualify yourself for a credit card.Here are the documents you need to prepare:
  • Photocopy of IC (front & back)
  • Latest 3 months EPF statement OR;
  • Latest 3 months bank statement (salary credited) OR;
  • Latest full set BE form & tax payment receipt OR;
  • Latest EA form OR;
  • Latest three months salary slip

How to Check Your Application Status

It usually takes one to two months for the bank to process your credit card application. A complete credit card application will include the required documents including a copy of your identity card, income statements and also Employee Provident Fund (EPF) statements.If you do not hear from the bank and wish to check the status of your application, you can always call the bank’s hotline number. Depending on which channel you applied through, you can always refer to the channel such as a specific branch, agent, or comparison site.For those who applied through a banking site, you can check your application status on your account over the internet.If you applied through CompreHero.my, call us at 012-385 0211 (Mon-Fri, 9:00am – 6:00pm) and we will update you from time to time until you successfully get your ideal credit card.Some banks have an online application where you get a tracking code, which you will need to have with you when calling their hotline, as they will need it to pull up your record.

What do I do if my application is declined?

If you have received a notice from the bank that your application is declined, there could be a few reasons contributing to it. However, it is best to consult the bank by calling up their hotline to find out the specific reasons so you can resolve them quickly.Several reasons which could lead to the rejection of your credit card application by the bank include:
  • Insufficient supporting documents
  • Insufficient income level
  • Bad credit score due to high debts or inconsistent loan payment pattern
  • Too many credit cards
  • CCRIS credit report of fewer than six months
  • Incomplete application form
  • Existing lawsuits
Based on the reasons as mentioned above, here are a few suggestions before sending your application to the bank:
  • Ensure all details in the application form are filled
  • Ensure to attach all required documents with your application for a credit card
  • Make sure you reach the minimum requirements such as income level and age
Most importantly, you must polish your credit record and make prompt payments for all of your financial commitments for at least six months (the longer the better!) before applying. Remember, even if you are not applying for any financial product, you should still be making prompt payments, as it helps to improve the chances of the bank approving your application in the future.Through your credit report, banks will be able to see your financial history of up to six months, so make sure you credit reports is updated from time to time and contact the credit rating agency if you need to update or make amendments.If you have been missing or making late payments a few months before you apply for a loan, there’s a strong possibility the bank will reject your loan application because of your poor payment pattern.

What is a credit card?

credit card is a way to pay for goods and services and is essentially a type of short-term loan issued by a bank or a financial institution to the account holder. This means that whenever you spend with your card, you’re borrowing money from the bank and paying for it with credit. Before your credit card is approved, the bank will review your credit history and monthly income to decide the maximum amount you can spend on your card (credit limit) and other terms. This differs from application to application.A credit card is a substitute for cash and is often used for short-term financing. This includes using it for daily spending on goods and services, or for expensive purchases when withdrawing a large amount of cash does not make sense. You must pay for your purchases made on credit within 30-days of purchase to avoid being charged interest.A credit card is not a good solution for long-term financing because of its high-interest rates. In fact, it can be one of the more expensive options as some credit cards charge an interest rate of 18%, which is the highest in the market. Instead, a personal loan would be a better option for long-term and you can find financing with interest from as low as 5%.Interest rates different between the various banks and type of credit card. It may also fluctuate based on how prompt your repayments are. If you pay your dues in a timely manner, you’ll be rewarded with a lower interest rate. Your credit score can also impact the interest rate offered to you, typically, the healthier your credit score, the lower the interest rate.

What is the difference between a credit card and a debit card?

In simple terms, a credit card allows you to spend with borrowed money and pay it back later.  It is not linked to your bank account and allows you to spend money up to your credit limit. You then have a choice to repay the amount spent within 30-days in full and avoid being charged interest or to repay a minimum amount which will be charged interest.A debit card is directly linked to your bank account (current or savings) and only lets you spend money you already have in your account. Each purchase is automatically deducted from your bank account. You, therefore, need to ensure you have sufficient money in your bank account before you make a purchase with your debit card.

Why do I need a credit card?

A credit card can offer you many benefits through its features and can be a great tool to manage your finances. However, it’s critical to equip yourself with the knowledge on how to use one to avoid landing yourself in an expensive mound of debt.A credit card is a great substitute for cash provided that you are able to repay the amount you spend each month. A few reasons it’s worth considering include:
  • It’s safe to carry around than a wad of cash
  • You get to enjoy extra benefits including protection on your purchases, cashback, air miles and rewards, and discounts or promotions with retail outlets or restaurants
  • It can be good for your credit score to build credit history, which is needed when applying for other personal finance products such as loans and mortgages
  • It can also help you pay for expensive purchases with a 0% interest easy payment plan that splits your lump sum payment into affordable instalments over a duration of months or over a few years. This gives you time to repay the bank for your purchase without being charged interest, however, if you fail to repay the amount within this duration, you will be charged the full interest rate on your balance.
Our credit card guides can help to equip you with the information you need to avoid landing yourselves in a huge amount of debt.

How do credit cards work?

There are a few components to understanding how a credit card works. We’ll break it down for you.For purchases: A credit card allows you to pay for goods and services in person or online. For online payments, you simply need to key in your credit card details, complete with security checks, and the transaction will be processed provided that you have not exceeded your credit limit. For in-store purchases, a simple swipe or tap your credit card at the payment terminal and authorise the transaction with either a PIN or a signature. This entire process goes through multiple parties however it will feel like a seamless experience for you.Typically, there are five parties involved in a credit card transaction:
  • Cardholder: You or any other authorised person (like your spouse or children whom you’ve given supplementary cards to) who can use the credit card to make purchases
  • Card Issuer: Institutions, such as banks and consumer finance companies, that issue credit cards
  • Credit Card Network: Organisations that set up the payment ecosystem and act as the middlemen between merchant acquirers and card issuers (like Visa, MasterCard and American Express)
  • Merchant Acquirer: Institutions, often banks, which process credit card transactions for merchants using a POS terminal
  • Merchant: Retailers, restaurants and e-commerce sites around the world that allow credit cards as a form of payment
payment-networks-guideCredit card repayments: You will need to repay the bank the full amount you have spent on credit. To avoid being charged interest on your outstanding amount, you will need to clear off your balance within 30-days of making the purchase. However, if you do not wish to pay the full amount on your credit card statement every month, you will need to repay at least the minimum amount. It is always best to repay more than the minimum amount because it may then take you years to clear off your outstanding balance and you will have incurred extra costs in the form of interest rate charges.

The pros and cons of using a credit card

Before applying for a credit card, it’s important to understand its advantages and disadvantages. A credit card can be extremely beneficial for you when used responsibly, you can enjoy the ease of the “buy-now-pay-later” concept and earn cashback, rewards or air miles every time you spend. However, it’s important to realise there are pitfalls to a credit card if mismanaged, which will cause you to pay a very expensive credit card bill with high-interest rate charges and racking up more debt than you can afford.

The Pros

  • Speed and Efficiency: A credit card is extremely easy to carry around, it’s weightless and doesn’t take up much space in your wallet. In fact, it’s hard to tell you even own one. Unlike a wad of cash that would be quite obvious hence making it a little less secure to carry around with you. Paying with a credit card is quick and seamless, often requiring nothing more than a swipe or tap on the payment terminal. You then key in your PIN or authorise the purchase with your signature and the transaction is complete.
  • Protection: Unlike cash, credit card providers usually offer their customers protection on the purchases made with their card. A purchase protection plan offers coverage against theft or accidental damage. Coverage varies between providers so be sure to check if it is included on your credit card if this is a feature you are looking for.
  • Buy-now-pay-later: For times when you need to make an expensive purchase and can’t afford to pay for all of it in one go, credit cards are a great solution. With the Easy Payment Plan (EPP) option, you can break your lump sum payment into affordable monthly instalments at 0% interest over a specific duration. This essentially allows you to borrow money for free through your card, as you aren’t being charged any additional interest. However, if you miss the deadline you’ll be paying the price for it with interest being added to your outstanding balance at the end of every month.
  • Earn benefits while you spend: When paying with cash, once the money leaves your hand you walk away with your purchased item and that’s about it. With a credit card, you can opt to apply for a card that provides you added benefits every time you spend which includes cashback, reward points, and air miles to name a few. This is only worthwhile if you are able to pay your bill in full – else the interest that you get charged on the outstanding balance each month cancels out the value of the rewards.
  • Emergency aid: In times when you are in need of extra funds and can’t seem to find an ATM near you to withdraw cash, a credit card can come to your rescue. It’s a security blanket that offers that assurance you will still have some form of payment if anything goes wrong with your debit card or you’re suddenly out of cash.
  • Good for your credit score: This is true only if you are able to use your credit card responsibly and can demonstrate your ability to make for your bills on time while paying off more than the minimum amount.
PROSCONS
Easy to carry/usePurchases are protectedBuy now, pay later conceptExtra benefitsGood for emergenciesCan be good for credit scoreEasy to spiral into debtHigh interest ratesCharges and fees (hidden costs)Expensive cash withdrawalsCan be bad for credit scoreFraudulent charges and identity theft

The Cons

  • The debt trap: It’s easy to forget as you’re spending with your credit card, that you’re actually using borrowed money which you always have to pay back. As easy as using a credit card is, there are risks involved of which the major one is falling into a spiral of debt. Because you’re not parting with physical cash each time you make a payment, it’s easy to lose track of your expenses. Once you find that you’re unable to pay off the total bill at the end of each month, you’ll start to rack in added charges in the form of high-interest Your debt will start to spiral out of control month-on-month and you’ll find yourself in a nasty cycle. You should always try to pay off more than the minimum amount and think of your credit card as a short-term financial tool.
  • Hidden charges and fees: The interest rate is not the only charge or fee you’ll have to worry about. There are others that you don’t necessarily notice until your monthly statement arrives which includes the annual fee, late payment fee, and penalty fees when you exceed your credit limit. These can creep up on you without realising it so be sure to always read the terms and conditions of your credit card.
  • Expensive cash advance: Unlike your debit card, a credit card should not be used to withdraw cash from the ATM. This is usually the last resort and only in cases of ultimate emergencies. Why? Because the interest rate you’re charged on cash advance withdrawals is usually the highest the bank will offer (between 17% – 18%) and isn’t worth it. On top of that, you get charged a 5% transaction fee every time you withdraw.
  • Can be bad for your credit score: This is true especially if you get caught in the debt trap and find yourself unable to make timely payments or if you can only afford to pay the minimum amount every month.
  • Fraud and scams: The main danger with carrying cash is usually theft. However, with credit cards, you are susceptible to other crimes including scams or fraudulent activity. Most credit cards are equipped with safety and security features to protect your account and your purchases, however, there are instances when you might find a fraudulent charge on your statement. Or you may have fallen victim to a very convincing scam which sees you divulging confidential information at risk of losing the security of your credit card. In instances such as these, contact your credit card provider immediately and there are measures in place to ensure this is rectified.

What is a supplementary card and when should I apply for one?

A supplementary card is an additional credit card that is issued under the principal account holder’s name upon request. As the principal account holder, you can decide who to give the supplementary card to. However, a supplementary card holder must be at least 18 years old and most times this is given to your spouse or to your child.A supplementary cardholder does not need to fulfil the minimum requirements as per principal account holder, which makes it a perfect option or your spouse who may not be working or your child who needs a card for emergency cases. It is a great option if you and your spouse want to consolidate your spending into a single credit card account. You will be able to earn rewards at a faster rate because the cards are linked to a single account holder. However, this also means the danger of spiralling into debt is a lot easier as every single spend is reflected in a shared bill.

Charges and fees

What is a credit limit and how is it calculated?

When you apply for a credit card, the bank reviews two main factors to determine your credit limit – your credit history and monthly income. Your credit limit is the maximum amount of money you can spend on your credit card. In Malaysia, for cardholders earning RM36,000 or less per year, their credit limit cannot exceed two times their monthly income. For cardholders earning more than RM36,000 per year, your credit limit is decided by the banks at their discretion based on your credit history and monthly income. This is in accordance with regulations by Bank Negara Malaysia (BNM).

What are interest rates and how is it calculated?

Interest is a charge applied by banks for lending you money. It is calculated as a percentage of your outstanding balance. The rate is determined by the bank upon review of your credit history and other factors in your application. Generally speaking, the better your credit score, the lower your interest rate. A healthy credit score demonstrates that you are in a healthy financial position and it is less risky for the bank to approve your application, therefore charging you a lower interest rate.Some banks also offer an interest-free or grace period for purchases made when you first receive your credit card. This can range from the first 20 days and basically means you receive no interest if you pay your bill in full. We recommend taking advantage of this grace period while you can, but be sure that you can afford to repay the amount on your card before the interest-free period is over.As of 2011, BNM introduced the tiered interest rates to help consumers manage their debt. A tiered interest rate involves different rates of interest depending on whether the cardholder can make timely repayments. For instance, the bank may offer you interest rates between 15% to 18% and this depends on how prompt your repayments are. For prompt repayments over a 12-month duration, they may decide to charge you the lower rate of 15%, however, if you consistently make late repayments they may decide to charge you the higher rate of 18%.Interest rates for credit cards vary widely, from around 8% to around 15%. Interest can be charged on retail purchases, balance transfers and cash withdrawals. Usually, different rates are charged for each category, with balance transfers having a lower rate and cash withdrawals having a higher rate.Note: interest rates for credit cards are mostly charged on a variable interest rate, which means that your interest rate might change with little to no notice. Go through your monthly statement to keep track of the interest rate charged on your credit cards.

What is minimum payment and how is it calculated?

When your credit card statement arrives, you’ll notice that there will be your total outstanding balance amount and a minimum amount. This is the very least you need to repay for that month, and you can opt to pay just the minimum amount, the whole bill, or any amount you choose.If you only pay the minimum amount, you’ll start paying interest on your outstanding balance so we do not recommend doing this. It will take a lot longer to pay off your debt, and you’ll end up paying a lot more than you borrowed. Always pay more than minimum.Most, if not all banks use this formula to calculate the minimum monthly payment: 5% of the outstanding balance or a minimum of RM50, whichever is higher.

What is an annual fee?

An annual fee is a maintenance fee that is charged by the credit card provider. The actual fee will depend on the bank and may differ depending on the tier of the credit card. Basic cards may come with zero annual fees whilst the more exclusive or premium cards may come with an RM1,215 annual fee (most expensive in the market) due to its exclusive features and benefits that are costly to maintain. Some banks waive off annual fees depending on cards usage and promotions or on the minimum spend/number of swipes per year. But be warned that at times, the minimum spend level required to waive the annual fee is unattainable. For example, Maybank’s World Mastercard requires a minimum annual spend of RM120,000 (RM10,000 monthly) in order to waive its RM1,000 annual fee.

What is a late payment fee?

If you make your payment after the monthly deadline on your statement, you might have to pay a late payment charge. Not only do you incur higher charges for the month, this may reflect poorly on your credit history and may translate a lower credit score. Most banks in Malaysia charge you 1% of your outstanding balance r RM10 (to a maximum of RM100), whichever is higher.

Foreign Transaction Fee versus Dynamic Currency Conversion

Many cardholders may not realise this but there are actually two types of fees that can be charged to your credit card when you travel overseas. The Foreign Transaction Fee or the Dynamic Currency Conversion (DCC).A foreign transaction fee is a fee charged by the bank or credit card issuers on every transaction that is made outside of the card issuer’s country of origin. The fee differs for every card depending on the bank or card issuer, however, can be as low as 1%.Similar to a foreign transaction fee, the DCC is a fee charged by the merchants to convert your purchase into ringgit or your home country’s currency. On the upside, it is convenient for because you instantly know how much the transaction will cost you in RM, but there is a catch. More often than not, this conversion is carried out by merchants with less competitive currency rates, so they may charge you a marked-up fee. On top of that, the merchants would make and earn an extra profit by charging the higher rate through DCC on the transaction. It could be more expensive for you than the 1% foreign transaction fee. Hence, we recommend opting for the Foreign Transaction Fee when making payments overseas.The key to remember is that you have the option to choose to charge your card with the foreign transaction fee or to opt for the dynamic currency conversion.

Applying for a Credit Card

How do I apply for a credit card?

Do your research: For starters, you need to figure out the right credit card for you based on your budget and lifestyle needs. The best way to do this is research. By visiting financial comparison sites like CompareHero.my, we do the hard work for you. With our free comparison tool, all you need to do is key in important details to help us narrow down the best cards for you based on your income level, spending needs, and more. Within 30 seconds, we’ll be able to offer you a range of credit cards that work for you. Be sure to review the benefits and features that come with the card, assess the additional fees and charges you would need to pay including annual fees, and determine if it offers you the added benefits you need like cashback or air miles or reward points. Also, be sure to determine that you can meet the minimum requirements for a successful credit card application.  Research is key and each bank or card issuer will offer you a different card, find the one that works for you best.Check your credit score: You will also need to check your credit score and you can do this with the various agencies including CTOS, CCRIS, and RAMCI to name a few. Knowing your credit score will help you determine if your application is likely to be approved or declined. A healthy credit score shouldn’t face any issues; however, an unhealthy credit score may need to be fixed and these improvements could take up to 6 months to reflect in your credit score.Understand you may not get the rates as advertised online: The interest rates online are advertised and may not necessarily be the interest rate that you will be offered by the bank. Why? Because the bank reviews each application individually and interest rates are usually determined based on your credit score and your monthly income.Apply online or at a bank branch: Once you’ve found the right credit card for you, you can proceed to apply online via our website and be sure to submit all the required documents. Or if we currently don’t have a deal with the bank of your choice, you can proceed to the bank’s website. Online applications usually take up less time but if you prefer to speak to a customer service representative, you can walk into a bank branch and apply with them face-to-face. Just be sure to have all the required documents handy.

How long will it take to apply for a credit card?

If you’re applying for a credit card online, the actual process doesn’t take much of your time, perhaps 10 – 15 minutes max. If you’re walking into a bank branch, this would depend on the speed of the service provided.Once you apply through our website, one of our Customer Heroes will be in touch with you within 1-2 days to verify your details and application. Upon verification, the application will be sent to the bank, and you can expect to hear from the bank once your application is approved within 1-2 weeks.

How many credit cards can I have?

In 2011, BNM announced new measures for credit card holders. If you are earning RM36,000 per annum or less, you are only allowed to hold a maximum of two (2) credit cards, from a maximum of two (2) credit card issuers. This means you can get two credit cards from a single bank or up to two banks, but nothing more.If you earn more than RM36,000 per month, there is no restriction to the number of credit cards you can hold. However, we encourage you to assess your affordability and debt levels before applying for too many credit cards under your name.

Credit Card Providers

Which banks provide credit cards in Malaysia?

 What is the difference between Visa, Mastercard, and American Express?

Visa, Mastercard and American Express do not issue credit cards, it is issued by banks or financial institutions. Visa, Mastercard and American Express are known as payment networks, they’re basically the computer systems that allow for processing of credit card transactions. They make money off each transaction. As a cardholder, you won’t find big differences between Visa and Mastercard.However, American Express (Amex) is slightly different. For one, it is not as widely accepted by merchants because of the cost issues. Amex has a slightly higher processing fee compared to Visa and Mastercards. Two, they issue their own cards which mean they determine their own interest rates, fees, and payment schedules (not the banks).As an overview, some of the benefits of these payment networks include:
  • Global Customer Assistance Services 24/7 no matter where you are in the world so you can report problems or lost/stolen credit cards.
  • 24/7 Concierge services including helping you to make last-minute dining reservations, flight reservations to name a few.
  • Deals and discounts exclusive to your card type
  • Globally accepted by millions of merchants around the world so you won’t ever have to worry about not being able to pay with your credit card
  • Global ATM network allowing you to withdraw cash when you need it
  • Exclusive access to airport lounges, golf clubs, and premier hotel memberships

How do banks make money from credit cards?

Fees and charges: Annual fees, late payment fees, cash advance charges and foreign currency transaction fees are some of the popular items on the menu, courtesy of your credit card provider (a.k.a the bank). Even if you’re someone who always pays their bills on time and has never been charged with interest, banks still rake in a lot of profit from you via an assortment of fees and charges.Interest rates: Credit card interest is easily bank’s biggest form of revenue, as most of the banks in Malaysia charge an average of 11% to 18% of interest on outstanding balances. Banks especially rake in their income off cardholders who the minimum or late payments, because the more balance you carry forward over a longer period of time, the higher the interest rate will get.Merchant fees: A lot of people are unaware of this, but the higher your spending power is (in retail purchase), the more profit the banks make. Each time you make a purchase from a merchant, a small percentage of what you pay (usually ranging from 1% – 3%) will go the credit card’s issuing bank as an interchange fee.This typically doesn’t directly affect you as a consumer, but some small-scale businesses will ask to charge you that 1%- 3% instead, although they are obliged by law to inform you of it beforehand.

Usage and Maintenance of Credit Card

How do I pay my credit card bill?

Upon receiving your credit card statement, you’ll need to arrange payment of your outstanding bill. You can choose to pay the minimum amount, your whole bill, or any other amount. We suggest to always pay more than minimum.Your credit card statement will detail all the possible ways you can pay your credit card bill. Here are a few of the frequently used channels:Online banking: You can log into the bank that you have your account with and if it is the same bank that has issued your credit card, it’s even easier. Your credit card account should be listed under Credit Cards and you will have the option to make a payment there.If you the card issuer is a different bank, you’ll need to do an Interbank Transfer online. Just make sure you key the correct credit card details.Other methods:
  • Cheque payment
  • Walk into the issuing bank and pay over the counter
  • Cash deposit machine
  • Auto-debit from your bank account

How do I cancel my credit card?

You may want to cancel your credit card(s) at some point, and you may have various reasons for doing so. Perhaps you own multiple cards, one of which has limited benefits and you want to cancel it. Maybe the charges and fees are too high and you have found a credit card that offers lower fees. Or perhaps you have once spiralled into debt and now that you are finally able to pay off all your outstanding dues, you want to avoid the temptation of it happening again.Clear off any outstanding balance unpaid on the card: Before you begin the cancellation process, you must clear off all your outstanding balance on the card. A debt does not go away simply because you intend on cancelling your card. You must repay all that you have spent on the credit card first.Redeem all your accumulated reward points or air miles: Ensure that you have utilised and redeemed all your reward points or air miles. Once you cancel, there’s no way of getting this back so don’t let it go to waste.Contact your bank to request cancellation: Each bank will have its own set of processes to cancel the credit card. Once they have advised the steps or documentation required of you, you can get the cancellation underway.Write an official letter to the bank: We suggest doing so to protect yourself in the event that any dispute charges may arise after you cancelled your credit card. It’s just an added precautionary measure but is not necessary.In the letter, ensure you have your full name, IC number, credit card number, credit card type, issued date and expiry date. State your reason for cancelling the credit card and include a line to clearly state the date you wish for the card to be cancelled or terminated, which is usually the date of your request. We suggest to make a copy of this letter and have it stamped by the bank to acknowledge receipt. Keep a copy of the stamped letter for yourself as proof that you have cancelled your credit card. You can even include receipt of payments to further prove that you have cleared your credit card balance before cancellation. Follow up on the status of your cancellation regularly. Once cancelled, cut the card into two and dispose of it.

How do I check my credit card balance?

There may be instances when you would need to check your credit card balance, perhaps before swiping on a large purchase or just before you travel abroad to ensure you have emergency funds (if needed).A few common methods of checking your credit card balance include:
  • Call the bank’s customer service hotline to enquire. They can do a quick check on their system once you have passed the verification process.
  • Log in to your bank account online. While some may not show you available balance, it will show the total amount spent to date and you can make an estimation from there.
  • Some banks, such as Citibank, Standard Chartered and CIMB Bank to name a few, offer an SMS service to check available credit balance. For example, it may be as simple as typing “CHECK BAL” and sending it to the provider’s number. Be sure to check with your bank for exact instructions and if they offer this service.

How to read your credit card statement

As a principal cardholder, you will receive a monthly statement from your issuing bank. This could either be in the form of a printed statement to your mailing address, or an e-statement to your e-mail address.If you have a supplementary card, your statement will include both the principal and supplementary transactions for the month.Here are key components of your credit card statement.Statement date: Date of the previous month transactions. For example, if the statement date is 20 March 2017, it is then a review of your past transactions from 21 February 2017 to 20 March 2017. It includes all transactions between your last statement date to the current statement date.Minimum payment: This is the minimum amount you need to pay on your outstanding balance. You may choose to pay only this amount, but you cannot pay anything less. We always suggest paying more than your minimum amount to avoid incurring high-interest charges and to also ensure you clear off your debt quicker.Payment due date: The date your payment is due which is the expiry date of a twenty-day period from the Statement Date.Credit Limit: The total amount you have available to spend on your credit card that has been offered to you by the bank. You can choose to pay off this whole amount, which would be best.Statement balance: The total amount you have remaining to pay on your credit card up to that Statement date.Overlimit: If you have exceeded your credit limit, this is the amount you have spent over the limit.Transaction date: The date of your purchase.Transaction Description: Details of the transaction including the merchant nameTransaction amount: The amount spent for each transaction. Any transaction amount marked with a CR is money that has been paid into your accounts such as repayments, cashback or refunds.

Credit Card Features and Benefits

Credit cards come in various types, each with its own features and benefits to serve the different needs of consumers and different income levels.The different features of a credit card include:
  • No annual fee credit cards
  • Air miles credit cards
  • Cashback credit cards
  • Rewards credit cards
  • Islamic credit cards
  • Premium credit cards
  • Business or company credit cards
  • Credit cards for women
  • Balance transfer and easy financing
An overview of benefits of these features include:
  • Getting money back in the form of cashback, rebates, discounts, and rewards, free flights
  • Value-added benefits in the form of access to travel lounges, exclusive dining discounts and deals and various other merchant discounts and deals
  • Freebies in the form of gifts you receive upon approval of your credit card including trolleys, annual fee waivers, and a higher cashback upon activation of your card
  • Debt management and the ability to afford larger purchases over an interest-free duration

No Annual Fee credit cards

The annual fee is a maintenance fee charged by providers of the credit card. But why pay for this when you have the option of applying for a credit card with no annual fee? This amounts to savings every year and is great for those who are getting their first credit card. You will still have all the features and benefits that come with the credit card, however, you just won’t have to pay the annual fee.

Air Miles credit cards

Air miles cards reward you with miles for every RM1 you spend locally and overseas. You don’t have to spend on travel-related items or air tickets to earn miles; spending at restaurants, retail, or online shopping counts as long as you charge it to your air miles card. With enough miles saved up, you can redeem them for air tickets from the card’s partner airlines, or use them to upgrade to business class for free. It’s the perfect card for frequent travellers as you will also enjoy added perks like access to airport lounges, free travel insurance, and discounts on hotels and dining overseas.The conversion rate of RM into air miles differs from bank to bank, be sure to review this when choosing the best air mile credit card for you. The range is RM0.30 per 1 air mile to RM12.50 per 1 air mile.

Cashback credit cards

Cashback credit cards are the most popular type of cards in Malaysia and for good reason – it gives you a portion of your money back based on a cashback rate. The bank transfers the money you spend on your card into cash rebates which are returned to you usually at the end of your statement cycle.In really simple terms, if your credit card offers you a cashback of 5% and your monthly spend was RM100, you would receive RM5 in cashback and your purchases would amount to only RM95.Most cashback cards offer cash rebates on specific categories, including petrol, groceries, online shopping or auto billing. Be sure that the card that you’re applying for, gives you cashback in the category where most of your spending goes to.Each bank has its own cashback rate such as Standard Chartered’s JustOne card at 15% cashback or HSBC’s Amanah MPower card at 8%. On average, the cashback ranges from 0.2% to 15%. Be sure to review the cashback rate when choosing the best cashback credit card for you.

Rewards credit cards

If you prefer to receive reward points and be part of a loyalty programme through which you can redeem your points for gifts, a rewards credit card is for you. You earn rewards for every RM you spend on your credit card. These reward points can be redeemed at a later date for any item on the bank’s reward catalogue which includes IT gadgets, household appliances and items, and more.Each bank has its own rewards programme and redemption rate, so be sure to review this before deciding on a card that best suits your needs. On average, you gain at least 1 reward point per RM1 spend up to 10 reward points per RM1 spend.

Islamic credit cards

Want the convenience of owning a credit card and its privileges while still adhering to the Islamic faith? Credit cards designed in accordance with Shariah compliance is your solution.An Islamic credit card – also known as credit card-i in Malaysia – offers a viable option for Muslims to have the convenience of a credit card while keeping true to their faith. It’s also an alternative option for non-Muslims as you don’t necessarily have to be Muslim to have an Islamic credit card. For non-Muslims who prefer the concept of Islamic banking, an Islamic credit card would give them an option aside from the conventional credit card.An Islamic credit card functions similarly to a conventional credit card but with some slight differences in the offered features.Banks that offer Shariah-compliant credit cards:

What makes a credit card Islamic and what are its benefits?

Shariah-compliant: Islamic credit cards need to be Shariah compliant and free from any activities that are deemed as unlawful in Islam. The main differences between Islamic credit cards and conventional credit cards are the prohibition of gharar and riba. Gharar is overcharging, while riba is interest. There are no compound charges as overcharging is also prohibited under Shariah law.An Islamic credit card would also have a filtering system to ensure that the credit card will only be utilised for halal transactions It simply means that an Islamic credit card cannot be used to purchase alcohol, gambling or for other activities and purchases that are not permissible in Islam. In the event that the card is used for such purposes, the card issuer will not allow the transaction to go through.No interest rates: Any interest or riba is strictly prohibited under the Shariah law, therefore the service provided by Islamic credit cards cannot involve any interest. It should also be noted that the prohibition of interest works both ways, which means a Muslim cannot pay for interest and cannot receive interest. Therefore, what Islamic banks do is provide Islamic credit cards by charging for their service, which is known as the ‘profit charge’, and only charged if there is an outstanding amount that is not paid within the grace period. The profit charge is usually calculated on a daily basis at 13.5% to 18% per annum. The profit charge is based on a tiered system, which means if you’d like to enjoy a lower rate for your outstanding balance, you’ll have to make sure you are consistent with your repayments. This is because missing a payment for your outstanding balance will cause the banks to increase your profit rate.Cardholders generally need to make a minimum monthly repayment of 5% on their credit card bills (or a minimum of RM50 – depending on the bank) by the due date of each month. Failure to make the minimum monthly repayment will not only make the profit rate charged on your outstanding balance to rise to a higher tier, you will also be charged a late payment penalty of 1% (or a minimum of RM10 – depending on the bank).Added benefits: Credit cards often come with perks and privileges, and the same goes for an Islamic credit card. An Islamic credit card usually offers takaful coverage, and some also offer benevolence expenses. It means that in the event of the cardholder’s passing, Islamic banks that offer benevolence expenses will pay the premium to cover some or the entire outstanding balance of the deceased cardholder. Aside from that, Muslims will also have the added convenience of paying their Zakat with an Islamic credit card.

Premium credit cards

Premium credit cards are the cream of the crop. There are various premium cards open for public application, but there are also exclusive clubs that are on an invite-only basis. These cards offer exclusive benefits and privileges often for the VIPs or those of the elite crowd. This includes benefits like a private concierge, access to first class lounges when you travel, complimentary green fees at some of the world’s best golf courses and of course, dining deals at fancy hotels and restaurants.These cards usually come with a high annual fee of over RM800 to RM1,000 and would require you to have a minimum annual income of at least RM200,000.

Business or Company credit cards

Banks also offer credit cards designed specifically for business use. These cards complement daily business needs while providing extra savings on business transactions or purchases to help your business grow. These cards usually offer a higher credit limit, added benefits for business travel and hotel, and preferred rates for cash withdrawals and foreign exchange. These cards will help meet the financial needs of small to medium enterprises.

Credit cards for women

Yes, there are credit cards available in the market that have been designed with the ladies in mind. These are specifically UOB Lady’s Mastercard and Bank Rakyat Kad Muslimah.UOB Lady’s MastercardThe UOB Lady’s Mastercard comes in three varieties – the Classic, Platinum, and Solitaire – with improved benefits in 2017 and a new rose motif card face by acclaimed designer Vivienne Tam.Created exclusively with women’s lifestyle needs in mind, this card offers:
  • Fashion Ten: 10% cashback on weekend fashion shopping
  • Beauty Ten: 10X UNIRinggit points on weekend beauty purchases and
  • LuxePay: Best of all is the 0% p.a. easy instalment plans across 6 or 12 months on luxury fashion jewellery, shoes, or bags above RM2,000
With LuxePay, that means you can now buy those pair of TOD’s shoes or Chanel bag without forking out a huge lump sum payment. For example, if you buy those TOD’s shoes at RM2,000, you will only need to pay RM167 per month for the next 12 months. You get your new pair of shoes and you don’t have to feel overburdened.See also: The Best Credit Cards for Women in MalaysiaBank Rakyat Kad MuslimahThis credit card is the first ever Shariah-compliant card designed for women in Malaysia.This card comes loaded with benefits and requires a minimum monthly income of RM2,000 per month. It’s a great credit card for those looking to own their first credit card as it also comes with zero annual fees.We love that it also comes with the Easy Payment Plan option for greater financial flexibility. It applies to any transaction above RM1,000 across a duration of up to 24-months. And there are also no additional charges when you spend overseas.

Balance transfer

A balance transfer facility involves transferring your current outstanding credit card debt to a new credit card which offers either a very low or even 0% interest rate. The idea is for you to consolidate all of your credit card debt into one credit card that offers you a much lower interest rate.Your payments will then go directly to the principal amount which you owe instead of you having to pay for more interest on top of the money you owe. Balance transfers are usually offered over a time frame between 6, 9, 12 or 36 months for repayments. However, when choosing a longer time frame, such as 36 months, you would not get the 0% interest rate, but the interest rate will still be comparatively lower than the original interest rates on your previous credit card.Some of the best balance transfer plans include from as low as 0% for 12 months are:
  • BSN Balance Transfer
  • Maybank Balance Transfer
  • Standard Chartered Balance Transfer Plus
  • Hong Leong Balance Transfer

Important points to note before using a balance transfer

Before you get excited there are a few important things you need to take note of so you don’t mess up the chances of clearing off your credit card debt.Know the details: First up, make sure you’re aware of the details entailed. For example, a card may say they offer 0% for a balance transfer but the fine print then states that for the first 6 months you get to enjoy 0% and then for the subsequent 6 months you will actually be charged 0.6% interest. So you need to know you will not get 0% interest rate on your transfer for a whole year with some cards, and definitely read all the fine print.Don’t make late payments: Next, you need to make sure you don’t make late payments because the charges would be exorbitant! That’s not the only bad thing to happen when you make late payments, as your credit card issuers could also revoke the promotional low-interest rate on your balance transfer card if you fail to clear your debt during the allocated time. You will then end up paying higher late payment interest which usually is calculated based on the 18% interest rate.Know the fees involved: There are also charges involved when you opt for a balance transfer such as upfront fees and balance transfer fees. Certain cards will also stipulate a minimum transfer for specific repayment periods. The time period and amount may also dictate if you do or do not get 0% interest rate. You should also know that the 0% interest rate is only for the amount transferred.Additionally, the 0% interest promotional rate is only for your transferred balances. As for the new purchases you make using the card, you will still be paying interest on it, so make sure you don’t swipe your card on your shopping spree thinking it will be 0% interest rate.Maximum cap per transaction: Lastly, there is also a maximum cap per transaction depending on your credit card issuer along with the amount of balance transfer amount. This means that some credit card issuers will allow you to transfer a balance from up to three other banks at one time, but a different bank may only allow transfers from two banks. So do take note that total amount may differ between credit card issuers.Balance transfers can help you to clear off your debt at a low or even 0% interest rate but this is of course if you make sure you stay on top of your payments and be diligent with your payments.

Easy financing

Credit cards offer easy financing options which allow you to make large purchases in affordable payment plans also known as the Easy Payment Plan (EPP).Instalment payment plans or EPP are actually the same things. Essentially it is a feature which gives you the flexibility to use your credit card to make a payment for a substantial amount then repay it in instalments within a certain period. The duration of the instalments will depend on the financial institutions or credit card issuers. However, it usually ranges from 3 months to 24 months.Instalment payments are particularly useful for larger purchases such as electrical items and furniture. However, there are certain things you need to know to take advantage of this feature.Make sure it is a 0% interest payment plan: In order to take advantage of an instalment payment plan, make sure it offers you a zero percent interest rate. Depending on your credit card issuer as well as the participating merchants, sometimes there may be a one-off payment or other fees involved when you use this feature.Tip: Read through the terms and conditions, it may be a bit tedious but that’s how you will know whether there are any hidden costs in your purchase through instalment plan!Make sure you shop at participating merchants: Before you run off to the store to make that big purchase you have been eyeing, make sure to check if the store is on the list of participating shops for your credit card’s instalment payment plan. Most instalment payment plans are only limited to participating merchants, which means usage of instalment payment plans is more limited, unlike your credit card which is accepted at most places.Understand the terms and conditions: Similar to other purchases made with your credit card, you will have to pay for the instalments on time, otherwise, there will be consequences. For example, if you miss your instalment payment, the 0% interest rate may be retracted without notice and you will be charged with normal interest rates which could range between 12- 18%  of the entire outstanding balance until you pay it all off.Therefore, in order to optimise this feature, you must be disciplined and not miss any payments. If you miss any payment it may result in you paying a lot more because of the penalty and revoked 0% interest.Aside from that, some banks will allow you to opt to pay the 5% minimum amount instead of the agreed monthly instalments. But it is important for you to know that If you pursue this option you will still be charged with interest on the outstanding amount.

Welcome gifts

Welcome gifts and promotions that come with signing up for credit cards can give you so much value in return. But we don’t advise choosing a credit card on the welcome gift alone. There are other factors to consider such as the terms and fine print that is snuck into these welcome offers.For starters, there may be a minimum spend requirement within the first few months of card approval, payment of the full annual fee upfront, or even a deadline for when you need to sign-up for the credit card and have it approved. Also, some banks only offer welcome gifts to new customers, so if you have an existing product with them, you may not be eligible.Banks are not the only ones to give out welcome gifts. Financial comparison sites like CompareHero.my also provide exclusive offerings upon activation of your credit card or approval of your personal loan. These are only exclusive to applications that are made through CompareHero.my and have been approved by the banks. For credit cards, you will need to activate your card in order to receive the welcome offer. 

Credit Cards in Malaysia

What are the benefits of comparing the best credit cards in Malaysia?

Finding the best credit card to suit your spending needs will help you get the most benefits and rewards for every RM you spend. This includes earning air miles for ever local and overseas spend, earning cash back on categories like Dining, Online Shopping, and Petrol to name a few, and earning rewards and discounts per RM spent. If you apply through our site, you'll also get exciting credit card sign-up bonuses and sign-up offers!

How does the comparison tool work?

We do the hard work for you by consolidating all the credit cards available in the market into a single site. Here at CompareHero.my we do all the comparison work for you with the help of our quick, free, and easy comparison tool. Just fill in the requirement information and you'll find all the cards that suit your requirements within a matter of seconds. Review the various details available and select the card that suits your lifestyle needs. The credit cards included in our comparison tool are based on the most trusted financial institutions in Malaysia. We have included a wide range of banking industry leaders, who can give you the best credit card options.

What are the steps for me to find the best credit card for my needs?

You can find the best credit cards in Malaysia in less than a minute. All you need to do is go to our credit card comparison tool, and fill in the required details about your lifestyle and CompareHero.my will do the rest for you. We will compare all the credit cards that cater to your lifestyle needs and within a matter of seconds, our comparison tool will display the best options for you. Review the various features available and apply for the card that best suits your need.

What is a credit card?

A credit card is an alternative payment method for goods and service. It is essentially a type of short-term loan that is issued by a bank or financial institution; this is where the term “credit card” is from. With a credit card – in simple terms – the bank lends you money first and then you repay them in credit when it is due.

What are the different categories of credit cards you can apply through CompareHero.my?

Types of credit cards
CategoryDescription
Best Deals Credit CardsOur most popular credit cards for their exceptional rewards and features, be it the best cash back rates, the most reward points, or one that lets you earn air miles blazingly fast, start your search here.
 Cash Back Credit CardsCashback credit cards convert every ringgit that you spend into lucrative cash rebates. The amount of rebate you get back depends on the cashback rate of the particular credit card.
AirMiles Credit CardsAirMiles credit cards are designed to allow you to earn air miles every time you spend. These cards give you access to a loyalty program offered by airlines.
Rewards Credit CardsRewards credit cards allow you to collect and accumulate rewards points that can be traded for a range of benefits, such as vouchers and discounts.
No Annual Fee Credit CardsNo annual fee credit cards are exempt from being charged your usual annual fee, but be sure to read the fine print to see how long the offer is valid for and if there are any terms to this. A no annual fee credit card will results in savings as you are not required to pay this fee.
Islamic Credit CardsAn islamic credit card is Shariah compliant, with prohibition of gharar (overcharging) and riba (interest). Islamic credit card offers takaful coverage. Aside from that, Muslims will also have the added convenience of paying being able to pay their Zakat with an Islamic credit card.
 

What is a supplementary credit card?

A supplementary credit card is an additional card that is issued under a principle account holder’s name. Basically, it is a secondary card that works under the same main account, making it easy to consolidate all payments under a single account, and you can also earn rewards at a faster rate. A supplementary card is usually given to a family member for emergencies; the supplementary card holder does not need to fulfil any requirements aside from being at least 18 years old.

When do I use a credit card?

As a credit card works similar to having a short-term loan, it is ideal as a substitute for cash to spend on your daily goods or services, such as your groceries or clothing. It is also ideal for slightly more expensive purchases such as a laptop or an expensive timepiece, as carrying a large amount of cash can be very dangerous.There is a limit as to how much you can spend on a credit card, however. This limit is decided by the bank based on your credit history and monthly income and differs from person to person. Do keep in mind that you must pay the credit card by the outstanding due dates or you will be charged interest.A credit card is not a good solution for long-term financing because of its high-interest rates. In fact, it can be one of the more expensive options as some credit cards charge an interest rate of 18% p.a., the highest in the market. Instead, a personal loan would be a better option for long-term financing with interest from as low as 5%.Credit card interest rates differ between banks and type of credit card. It may fluctuate based on your repayments too; if you pay in a timely manner, you’ll be rewarded with a lower interest rate. Your credit score can also impact the interest rate offered to you. Typically, the healthier your credit score, the lower the interest rate. In Malaysia, you can obtain a copy of your credit report from CCRIS or CTOS. 

What is a credit limit?

A credit limit is the maximum spending limit that is applied to your credit card when you apply for one. The credit limit is determined by two factors: your credit history and your monthly income. In Malaysia, cardholders earning RM36,000 or less per year have a credit limit that doesn’t exceed two times their monthly salary; those earning RM36,000 and above has their credit limit determined at the bank’s discretion. 

What is the difference between a credit card and a debit card?

The main difference between a credit card and debit card is where the money is from when making a payment or purchase.
Comparison of Credit Card & Debit Card
Credit CardDebit Card
  • Allows you to spend borrowed money and repay later
  • Has a credit limit
  • Isn’t linked to your bank account
  • Allows for instalment payments
  • Directly linked to your bank account (current or savings)
  • You can only spend money you have in your account
  • Money spent is directly deducted from your bank account
 

Why do I need a Credit Card?

While a credit card can pile on your debts, it is a very useful tool that can bring a lot of benefits through its features. You must be disciplined and keep in mind that you have to make repayments at the due date responsibly.
  • Safer than cash
  • Enjoy protection on some purchases such as flight insurance
  • Enjoy benefits such as reward programmes and points, cashback and rebates, airmiles, and exclusive discounts and promotions with retail transactions at selected outlets, restaurants, and services. Get more out of your retail spending!
  • 0% interest instalment plans (over several months) for more expensive purchases, such as a computer or a smartphone
  • Helps to build credit score; important when applying for other financial services such as a car loan
 

How do Credit Cards work?

When you make a purchase with a credit card, be it through an online portal or swipe at the payment terminal in a brick-and-mortar shop, the payment process goes through a process with several parties in the back. It will be a simple and near-instantaneous experience for you, however.Typically, there are five parties involved in a credit card transaction:
Parties involved in a typical credit card transaction
FactorDescription
CardholderYou or any other authorised person (like your spouse or children whom you’ve given supplementary cards to) who can use the credit card to make purchases
 Card IssuerInstitutions, such as banks and consumer finance companies, that issue credit cards
Credit Card NetworkOrganisations that set up the payment ecosystem and act as the middlemen between merchant acquirers and card issuers (like Visa, MasterCard and American Express)
Merchant AcquirerInstitutions, often banks, which process credit card transactions for merchants using a POS terminal
MerchantRetailers, restaurants and e-commerce sites around the world that allow credit cards as a form of payment
 

The Pros & Cons of a Credit Card

Like many things in the world, the credit card is not without its ups and downs. It is very important that you understand the pros and cons of a credit card. When managed correctly, the credit card brings a lot of benefits and rewards, but if mismanaged, the credit card can be an instrument that leads to high debt.
The Advantages of Credit Card
  • Speed and Efficiency: A credit card is extremely easy to carry around and paying with one is quick and seamless, often requiring nothing more than a swipe or tap on the payment terminal.
  • Protection: Credit card providers usually offer their customers protection on purchases made with their card. A purchase protection plan typically offers coverage against theft or accidental damage. Coverage varies between providers.
  • Buy Now, Pay Later: For times when you need to make an expensive purchase and can’t afford to pay for all of it in one go or during those really limited sale periods, credit cards are a great solution.
  • Instalment Plans: With features such as the Easy Payment Plan (EPP), you can break down your expensive purchases into monthly repayments with 0% interest (varies among providers). If you miss the payment deadline, then you’ll have to pay either a penalty fee or have the full interest added to your outstanding balance at the end of every month.
  • Earn Benefits while you Spend: Making purchases with a credit card can allow you to rake in rewards such as cashback, reward points, and air miles.
  • Emergency Cash: If, for some reason, you are unable to withdraw cash from the ATM or your debit card isn’t working, a credit card can be used for advance withdrawals.
  • Good for your Credit Score: Using the credit card in a responsible manner can help build your healthy credit score, which is then used to determine your application eligibility for other financial products and services.
 
The Disadvantages of Credit Card
  • The Debt Trap: It’s all fun when you’re swiping and tapping your credit card everywhere that It’s easy to forget you’re spending borrowed money. It’s especially easier to forget because you’re not parting from physical cash. Keep track of how much you’re using your credit card so you don’t build up an outstanding you can’t pay.
  • Hidden Charges and Fees: A credit card may come with other “hidden” chargers and fees such as an annual fee, late-payment fee, and even penalty fees for exceeding your credit limit.
  • Expensive cash advance: Cash advancement on a credit card is often for an emergency and should be treated as one. The interest rate for advance cash withdrawals are high, between 17-18% and you can get charged a transaction fee.
  • Can be bad for your credit score: It is only bad if you are unable to manage your credit card repayments responsibly, such as missing out on payments or not paying the full amount due.
  • Fraud and Scams: A credit card is susceptible to fraud and scams, even with safety and security features to protect your account and the card. It is very important that you do not simply divulge your credit card information to anyone.
 

Credit Card Charges and Fees

A credit card has several different types of fees and charges. Some of these depends on what you use the credit card for and some may be just be a general fee. Here are some of the most common fees and charges.
Fees and charges associated with the use of a credit card
FeesDescription
Annual feeThe credit card annual fee is a fee that is charged yearly for the privilege of owning a credit card. Not all credit cards have an annual fee, however. Some cards may also waive the fee depending on how much you spend.
Cash advance feeThe interest rate charge for a cash advance withdrawal can go up to 18%; there is a one-time transaction fee for the cash withdrawal too.
International ATM withdrawal feeYou will be charged a one-time transaction fee as well as the bank’s currency rates – typically higher than the usual.
Balance Transfers feesWhen transferring balances to another credit card, you will be charged 0% to 5% on the total amount as transfer fees.
Late feeA fee is charged when you miss out on a monthly repayment; this fee is either a flat rate or a percentage on the totally repayment, whichever is higher.
 

What are interest rates and how is it calculated?

Interest is a charge applied by banks for lending you money. It is calculated as a percentage of your outstanding balance. The rate is determined by the bank upon review of your credit history and other factors in your application; it is usually between 8% to 18%. The better your credit score, the lower your interest rate. A healthy credit score demonstrates that you are in a healthy financial position and it is less risky for the bank to approve your application, therefore charging you a lower interest rate.

Applying for a Credit Card

How do I apply for a credit card in Malaysia?

  1. Research! It is very important to understand what you want a credit card for. There are many different credit cards out there that have different benefits and features that may fit different lifestyles. You can use a credit card comparison tool like our very own to help you out. Just fill in the required details and the tool can automatically draw up the suggested credit cards for your needs. Make sure you read all the little details about the card such as the charges and fees, benefits, interest rates, and most importantly, if you meet the minimum requirements.
  2. Check your Credit Score Your credit score is what banks will mostly use to determine if you can get a card. There are various credit scoring agencies that can provide you with a credit scoring report such as CTOS, CCRIS, and RAMCI. If you have a healthy credit score, then you should be easily approved for a credit card.
  3. Understand you may not get the rates advertised online The rates you see online may not necessarily be the rates you’ll receive when you apply for a credit card. This is because the bank determines the final rates of everything based on each individual’s financial profile.
  4. Apply online or at a bank branch Once you’ve determine the right credit card to get, you can either apply online on our website or in-person at a bank branch. An online application is generally much faster and more convenient. If you are applying online on our website, you will need to fill in the form after you click on “Apply Now”
 
If you are walking into a bank branch, you will need to provide several documents such as:
  • Copy of your identification Card
  • Latest 3 months payslip
  • Latest 6 months savings account activity statements
  • (Varies between different banks)
 

Types of Credit Cards in Malaysia

There are several different type of credit cards in Malaysia, but they are generally in these few main types:
Types of credit cards in Malaysia
Credit CardDescription
CashbackCashback credit cards do what their name suggests, they give you cash back. For every amount you spend, a percentage of that will be returned to you, either on a monthly or quarterly basis. There is also usually a maximum cap amount which varies between banks.
RewardsReward credit cards let you earn rewards points for every ringgit you spend. Some bank-partnered merchants may even offer 2x to 5x the amount of points when you shop with them, and some may give you higher points if you shop during the weekends too. The points can then be redeemed for gifts or shopping vouchers with the bank.
PetrolPetrol credit cards give you petrol benefits with the partnered petrol companies. You can earn rebates and cashback when purchasing fuel and even get discounts.
Air MilesFor the frequent flyers, an air miles credit card earn the cardholder air miles when they purchase tickets with the travel credit card. These air miles points can then be converted into flight tickets. These travel cards may also give discounts, special flight packages, and even travel insurance.
PremiumPremium credit cards come with a lot of premium services such as a personalized concierge service, along with dining and lounge privileges. However, these credit cards are typically very expensive and have high income requirements.
Miscellaneous or Specialty cardsThese are credit cards that partner with certain brands and shops, such as getting special ticket promotions at GSC or at TGV, and getting more in-store points with certain anchor tenants.
Keep in mind that most credit cards today have a combination of several types, usually rewards and cashback. 

What are the best credit cards to get?

By now, you must be asking "what is the best credit card for me?" Here are some of our recommendations:
We recommend the following credit cards
BenefitsOur pick
For Cashback
For Rewards
For Petrol
For Air Miles
Can't find what you're looking for? Read our article to find out the best credit cards in Malaysia.
Depending on your credit score, you may be able to hold multiple credit cards. However, the number of credit cards you have and your repayment behaviour will affect your credit score. In 2011, Bank Negara Malaysia introduced a guideline stating that anyone with an annual income of RM36,000 or less can hold credit cards from a maximum of two issuers. Focus on choosing one or two credit cards which suit you and your requirements best. Eventually, if you prove your good repayment behaviour, you will be offered a higher credit limit.
As long as you pay your credit card in full and on the date in your credit card statement, you do not have to pay interest on your credit card.
In order to be eligible for a credit card in Malaysia, you need to be at least 21 years old and financially stable. Each credit card issuer has its own minimum annual income requirement. In most cases, a minimum annual income of RM24,000 is required, but this could vary from bank to bank. You don't need to have an existing account with a bank to apply for a credit card from them.Remember to always research the best credit cards before applying!
If you're earning an annual income of RM36,000 or less, the maximum limit extended to you will not exceed twice your monthly income for every credit card issuer. This guideline does not apply if you are earning more than RM36,000 per annum, so you should consult your credit card issuer in Malaysia to find out how much your credit limit will be. Your credit limit can also be raised if you show good repayment behaviour. You can talk to your credit card issuer about raising your credit limit.
You can call the bank to ask for a review in your application. However, approval for an increase in credit limit is usually determined on your credit score. By being prompt in paying your monthly bills, the bank might increase your credit limit.
Choose a credit card that complements your lifestyle. Cashback cards help you save on groceries, petrol, and dining. Air miles cards let you earn miles for every RM1 you spend, which you can redeem for free tickets. Rewards cards let you earn points for every RM1 you spend, which you can redeem for vouchers.By using our comparison tools, you can quickly see which credit card has benefits that are most useful to you. Make sure to compare annual fees and effective interest rates so you know what extra charges apply.
Credit card issuers provide various methods of payment, from online banking, paying through telephone or mail, or visiting a branch of the bank to settle the balance. The most convenient method is to create a bank account and have credit card balances deducted automatically every month.
The processing time varies depending on the card issuer, but as soon as your application has been approved, it normally takes 7 to 10 working days until you receive your card. Make sure that you submit all the relevant documents so that your application can be processed as quickly as possible.
If you suspect an unauthorised transaction has been made on your account, check if you made any other purchases on the same day before contacting your bank. The item could have been mistakenly billed under a different name. Also, ask anyone who uses the card with your permission (such as your partner) if they made the purchase. Once you have confirmed that the transaction was unauthorised, contact your credit card issuer immediately. Credit card issuers provide 24/7 customer service to address these matters, so do not hesitate to take immediate action. Failure to do so could make you liable for the unauthorised transactions charged to your credit card.
The minimum payment is a sum that you will have to pay each month in order to avoid getting a bad credit score. It is calculated according to your outstanding balance, and will appear in your monthly statement. Other factors that will affect your minimum payment are unpaid balances or any balances that exceed your credit limit.If you pay the minimum amount on your monthly bill, there will still be interest charged to any unpaid amount. This will be carried on to your next statement. However, if you fail to pay the minimum fee, a late payment fee will be charged to you, on top of the interest on the outstanding balance.
An annual fee is also known as a maintenance fee that is charged annually by your credit card provider. Some banks waive off annual fees depending on cards and promotions.