Credit card, Debit card, Charge card- What is the difference?
| Aspect | Credit Card | Debit Card | Charge Card |
|---|---|---|---|
| Payment Method | Option to make a minimum payment (5% of outstanding balance or RM50, whichever is higher) and carry forward the rest. | Access money directly from a linked current/savings account. | Must be paid in full within 15 to 30 days from the date of billing. |
| Credit Limit | Specified credit limit | Usage is limited to the available balance in the account. |
Very high compared to credit cards. |
| Interest | 9%-18% p.a. On the outstanding amount forward | None | None |
| Penalty | Card not frozen as long as payments are made promptly and the credit limit is not exceeded. | None | The card is frozen if the bill is not paid by the due date. |
| Service Tax | RM 50/year on all principle credit cards while RM 25/year on all supplementary cards. | None | None |
| Credit Score | Helps build credit score when bills paid on time. | Do not impact credit score. | Can indirectly affect the score based on the payment record. |
| Benefits | Offer additional benefits and rewards (presents, cash returns or discounts for products, services, and special events) | Similar benefits as credit card. | Benefits like travel rewards, concierge services, and excluisice event access. |
Loanstreet recommends:
-
Have at least 1 credit card to build a credit history. Without any credit history, it is difficult to obtain a bigger sized loan (E.g. home loan) from a bank
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For those with problems being disciplined in spending, debit cards may be a safer choice
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Plastic cards may prove to be a life saver in times of emergencies where cash is short
Finding the Best Card for You
If you have never ever owned a plastic card, getting one opens up a world of convenience and many other benefits and rewards. But don’t lose yourself spending on your cards unwisely no matter how tempting it can be.
And always remember to choose the right type of card for your lifestyle. Learn how to choose the right credit card over here.
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
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