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Credit card

A Guide to Choosing and Applying for Credit Cards

We list out the best credit cards for different profiles twelve common credit card profiles in Malaysia and the best ways to apply for them.

By Ooi Chia Shen on October 13, 2017 | Reading time: 5 minutes

Choosing-a-Credit-Card

Applying for a credit card is not difficult. However, before applying for a credit card, you need to understand the features and type of credit cards in the market to suit your personal financing needs. We will guide you on how to apply for a credit card through different channels and the standard procedures involved.

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-users

In 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 Holders

You 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: Cashback, No 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: Cashback, Rewards

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: Cashback, Rewards, No 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: Cashback, Rewards, Islamic

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: Airmiles, Rewards

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 Deals, Airmiles

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.

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