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What you need to know about credit cards

Got questions about how your credit card works? We break it all down for you - from annual fees, credit scores to how to choose a credit card that suits you best.

What is a credit card?

A credit card is a plastic card supplied by a financial payment solutions company (Visa, MasterCard, AMEX, etc.) and issued by credit services providers (normally banks) which offers a 30-day short-term loan to purchase goods or services on credit.

Why should I get a credit card?

Having a credit card can open a door of opportunities. Here are four benefits you stand to gain from having one:

Convenience

Not only can credit cards offer you the convenience of cashless shopping, but the financial flexibility of a monthly instalment plan especially for big-ticket items. On top of that, credit cards can provide a balance transfer facility that allows you to consolidate your debt into just one payment.

Rewards

Earn flights, points, cashback, and more just by doing your everyday spending. Most credit card providers allow you to convert your spending to air miles, loyalty points, or cashback which you can use to treat yourself and your family to even more rewards.

Privileges

Each credit card comes with its exclusive privileges. Some offer free travel insurance for the avid traveller while golfing enthusiasts would benefit from exclusive access and reduced green fees at golf courses worldwide.

Promotions & Discounts

Unlock a host of exclusive promotions and discounts that are only applicable when you swipe your credit card. From special dining deals to delightful holiday packages, these are only applicable to credit card holders.

What are the different types of credit cards available in the market?

Card Suppliers

There are three major credit card suppliers in Malaysia: Visa, MasterCard, and American Express. While American Express may offer higher treats points or cash rebates, it is not widely accepted by many merchants due to the higher charges charged to them. Please refer to the chart below on the differences between these three cards in Malaysia.

Card Supplier VisaMasterCardAmerican Express
Card Range
  • Classic
  • Gold
  • Platinum
  • Signature
  • Infinite
  • Standard
  • Gold
  • Platinum
  • World
  • World Elite
  • Gold
  • Platinum
Customer Service24-hour multi-lingual assistance24/7/365 services incl. emergency assistanceOnline
Contactless FacilityPayWavePayPassNot available in MY
Payments/ TransfersNet banking, mobile or ATM with 16 digitsMoneySend (P2P) in 2 banking daysDirect debit or bank transfer
Online Payment Security/ Fraud ProtectionPassword/3-digit security code via mobile text messageCode 10 Authorisation – independent approval for each transactionBilling zip code/card security code, auto time-out for 10 mins inactivity
AccessibilityInstant cash access at over 1.9mil. ATMs worldwideInstant cash access at over 32mil. ATMs worldwideCash access at over 1.2mil. ATMs worldwide
PromotionsTravel, Dining, ShoppingTravel, Dining, ShoppingTravel, Dining, Shopping
Mobile appVisa ExploreMasterCard NearbyAmex Mobile

As you can see from above, both Visa and MasterCard offer a comparable level of service with nothing much to distinguish between them. Rather than choosing based on brand, it is wiser to make a credit card choice based on your budget, requirements and level of services or benefits provided by the banks.

Card benefits

You might find some cards with a combination of the following types of benefits.

Card BenefitPoints RewardsCash RebatesAir Miles
How to Earn?Accumulate points towards a reward structure based on card usage over timeHigher rebate percentage with increased usage in specific categoriesAccumulate miles/points based on flights you buy with the card
What do I get?Redeem from a wide range of premiums listedAutomatically debited into your credit card accountRedeem round-trip flights (via associated airlines) for free
Category
  • Travel
  • Petrol
  • Shopping
  • Dining
  • Groceries
  • Entertainment
  • Retail purchase
  • Travel
  • Petrol
  • Shopping
  • Dining
  • Groceries
  • Mobile
  • Entertainment
  • Online purchase
  • Retail purchase
  • Travel
For whom?Individuals who enjoy the gift redemption systemIndividuals who prefer maximising cashback by spendingFrequent air travellers

Note: A basic card does not come with the benefits above, only with other credit card financial benefits found in Section 6 below

Islamic Credit Cards

These types of cards have a few minor differences apart from Shariah-compliant transactions and rewards. Non-Muslims are eligible to apply too.

Do credit cards work similarly to debit cards?

There are several major differences between credit cards and debit cards as highlighted in the table below.

Card type:Credit CardDebit Card
Overview:30-day loan for purchasesLinked to a bank account
Similarities:

1. Wireless transactions for payment convenience

2. Merchant deals and validities

Differences
1. SupplierVisa, MasterCard, AMEXVisa or MasterCard
2. IssuerCredit card service providersBanks
3. Requirements

i) Min. age

ii) Min. income

 

21 years old (principal)

RM 24,000

 

Depends on account

Depends on account

4. FacilitiesBalance Transfer, Cash Advance, Instalment PlanInstalment Plan
5. Fees & chargesAnnual fee, waiverRM 10 per card replacement
6. OthersCredit score, stable jobAlternative for those with poor credit

Are there any promotions when signing up for a credit card?

Yes, there are! For new credit card sign-ups, there is always a sign-up benefit waiting for you. It can be freebies, cashback or better reward rates for the initial period when you start using your credit card. Choose the credit card that delivers you the most valued benefits!

What are the financial benefits credit cards offer?

Balance Transfer

Balance transfer is a plan which allows you to transfer some or all of your credit card debts with other banks into a credit card with another bank with which you do not have any debt. This may incur a transfer fee or service fee to the new bank. Usually, you will enjoy a lower interest rate for the transferred amount or even a 0% interest rate. Depending on the bank, this plan offers you six to 36 months to clear your total outstanding balances.

Instalment Plan

For retail purchases above RM 500 (can vary across merchants), you may enjoy interest rates as low as 0% on monthly instalment bills from certain banks for a minimum of six up to 36 months. The card, however, cannot be cancelled until the total amount due has been repaid.

Cash Advance

Urgent cash withdrawals via ATM, up to approved credit limit. To enable this feature, you need to activate this function with the bank and acquire a six-digit password to use the ATM. Note that higher cash advance interests and fees may apply.

Complimentary coverage with credit cards

Travel Insurance

Enjoy complimentary travel insurance up to RM 2,000,000 for selected credit cards. You may or may not need to charge your air tickets to your credit card.

Airport Lounge Access

Exclusive credit cards provide limited or even unlimited free access to local and international premium lounges annually. You will be issued a lounge access card or vouchers, which you will be required to present when you wish to access a lounge at the airport. You may also be entitled to discounts of up to 25% for each accompanying guest.

Airport Transfer

Limited, complimentary rides to the airport are offered if you hit a certain amount of spending in a year or quarter. You will need to make an advanced booking with the bank and of course, show some courtesy by not letting the driver wait for more than 15 minutes!

Golf Privilege

Enjoy golfing discounts or complimentary green fees. Book your tee time ahead through the bank concierge.

Other

Apart from coverages i to iv above, some banks may offer you a complimentary Touch’n Go Zing Card with auto-reload services or lower interest rates for personal loan applications. Not limited to these, there are many more privileges that you stand to benefit from.

How to choose a credit card

Get to know your spending behaviour

Are you familiar with how you spend your money?

  • If you are a frequent overseas traveller, a travel reward credit card that offers air miles redeemable for free flights would best suit you
  • Shopaholics or even grocery buyers may want to look for a card with high rewards on shopping for both retail and online
  • Foodies would benefit from choosing a credit card that provides exclusive 1-for-1 or big dining discounts
  • If you frequently indulge in your hobbies and entertainment such as going to the movies and leading the café life, a lifestyle credit card would be most suitable for you
  • None of the above? You can still use the credit card for all normal spending. Take note that the higher the income requirement for the credit card, the higher the rewards rate will be

Understand the common fees and charges

Annual feeDepends on card benefits, can be free or with waiver criteria
Min. monthly paymentMin. RM50 or 5% of the outstanding balance, whichever is higher
Late paymentRM10 or 1% of total outstanding balance whichever is higher (excl. interests and fees as at statement date), up to RM100
Finance charge
  • 15% p.a. – Prompt payment for last 12 months
  • 17% p.a. – Prompt payment for 10 or 11 out of 12 months
  • 18% p.a. – Prompt payment for less than 10 out of 12 months
Cash advance5.3% of cash amount and 18% p.a. daily interest
Balance transferDepends on the bank; as low as 0%
Instalment planDepends on the bank; as low as 0%
Interest-free period30 days from statement date and applicable only to cardmembers who pay in full or before payment due date

What else should I know before choosing a credit card?

Before application

All credit card providers have a set list of criteria to consider for each credit card applicant. For example:

Minimum Age

To be eligible for a Principal credit card, you have to be aged 21 or above. Students between 18 to 20 years old can only opt for a Supplementary credit card because a Principal card applicant must be able to show proof of income (read more below).

Minimum Income

The lowest annual income requirement in Malaysia is RM24,000 or the equivalent of RM2,000 per month on gross pay before most fresh graduates or young adults can afford an application. When you have the financial ability to fulfil higher income requirements, you may then consider credit cards with greater rewards rates.

Credit Score

Your existing debts and repayment behaviour will be examined. This is especially important for experienced working adults above the age of 25 who may already have a credit card, student loan (such as PTPTN), car loan or home loan.

During application

  • Prepare supporting documents for verification of personal details
  • Apply online or offline
  • Be updated for the card approval status
  • Card activation upon receipt with given instructions, complete within minutes.

After application

Make prompt repayments to avoid late payment charges or finance charges and maintain a good credit score for future applications of financial accounts.

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