CompareHero.my's Guide to Credit Cards in Malaysia

A credit card is essentially a type of loan, which means that whenever you buy something using your credit card, you're borrowing the money to pay for it from your credit card provider. Before you get a credit card, your bank or lender will review your credit history and decide on your credit limit and what the terms of repayment will be.

A credit card is considered to be a type of unsecured loan that gives you access to a line of credit. This means that you do not have to put up any assets as collateral to borrow money from the bank. Credit card issuers give a limit on the amount you can spend using your credit card. This is known as the credit limit, and is normally decided by how much you earn annually.

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 Organisation: 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
With so many cards available and with so many different benefits offered, how do you know which one is the best credit cards for your needs? Here is a list of the features and benefits that credit cards in Malaysia offer. Choose your own requirements from this list and head over to our credit card comparison page to see which credit card offers you the benefits you're looking for.
  1. Balance Transfer Credit Cards

    The balance transfer service allows you to consolidate your debt from a few credit cards into just one. You pay a percentage of your outstanding balance as a balance transfer fee and enjoy an interest rate as low as 0%. You need to settle your debt by a fixed period of time, which usually varies from 12 to 36 months.

  2. No Annual Fee Credit Cards

    Many credit cards now offer no annual fee for life! Make sure you read the fine print carefully though, as there might be some strings attached: some might just be free for one year, and some may require you to spend a minimum amount per year before you are able to qualify for the RM0 annual fee.

  3. Air Miles Credit Cards

    Credit cards with traveller benefits offer you many deals, ranging from flight tickets to shopping privileges worldwide. Travel rewards often include air miles, free travel insurance and access to airport lounges worldwide, as well as shopping and dining privileges worldwide.

  4. Rewards and Cashback Credit Cards

    Credit cards with traveller benefits offer you many deals, ranging from flight tickets to shopping privileges worldwide. Travel rewards often include air miles, free travel insurance and access to airport lounges worldwide, as well as shopping and dining privileges worldwide.

  5. Islamic Credit Cards

    Islamic credit cards in Malaysia are compliant with Sharia Law. Islamic credit cards often include cashbacks, reward points, and other rewards as well. They may also include free Takaful insurance.

Cashback rebates are rebates you are eligible for when you make a transaction using your credit cards. The amount of rebates you accumulate in the month will get credited to your account at the end of the month or a quarter of a year, depending on the features of the credit card.

In Malaysia, the cashback rate is generally around 1% to 3%. However, there is a wide range of cash rebate terms as well. For example, cash rebates might be tiered by spending categories and cashback rates might be tiered on cumulative spending over a period of time with a cap on maximum rebate.

Some issuers even offer more incentives when you spend overseas or use your card for online purchases. You can refer to CompareHero.my's Cashback Credit Card comparison tool to select the best option based on your spending habits and needs.

Rewards points are points you accumulate with spending using your credit card that you can exchange for vouchers, air miles and gifts. It is part of a loyalty scheme that most banks offer to their cardholders.

Each bank has its own varying terms or ways that you can redeem rewards points. Some banks have expiry dates for rewards points, while some do not.

You can check CompareHero.my's Rewards Credit Cards comparison tool for a quick summary of the incentives offered by each card issuer.

Credit card interest is shown as Annual Percentage Rate (APR) on advertisements. APR is the total cost of credit, shown as a percentage. It includes fees and interest. Comparing the APR of different credit cards in Malaysia is a convenient way for applicants to compare the wide range of personal loans available on the market. 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.

The interest rate charged for credit cards in Malaysia varies for each individual. You will usually be able to get a lower interest rate if you have a good credit score. With credit cards, interest is charged on the outstanding balance, so it is best to pay off the full amount at the end of each month. If this is not possible, try to avoid just paying the minimum. If you pay just the minimum, the amount of interest you have to pay will snowball and it will take you much longer to pay off your debt completely.

CompareHero.my's team is all about helping you find the best deals for financial products. With our easy-to-use comparison tool for Credit Cards, you can easily search for the right one based on your needs.

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