First, let's just take a look at the tables below of different aspects of credit cards and how to compare them
Remember, your spending habits, personality, and job status could play important roles in choosing your first credit card. For instance, if you are financially very well-organized and feel responsible enough to pay your debts on time, then getting a credit card with reward points and bonuses could be the right choice for you.
Or let's say you travel a lot because of your job, then you can think of applying for cash back credit cards for travel benefits and petrol redemptions. Here are some aspects that you can look into.
| Aspect | Descripton | Look For |
|---|---|---|
| Annual Fees | Yearly Fixes Charges. | Free, conditional waivers, OP the cheapest. |
| Financing Interest Rate | Interest charge on your card balance if any balance is carried forward over the following month. | Lowest interest rate. |
| Balance Transfer Program | Special interest rate repayment schemes for transferring balances from 1 card to another. | Lowest interest rate. |
| Cash Withdrawal | Withdrawals at ATM using a credit card. | Lowest cash withdrawal fees. |
| Easy cash/ Fast Caash Facility | Cash loan using your existing card's credit limit, transferred into your savings/ current account. | Lowest interest rate.AND Lowest minimum amount. |
| Easy Pay/ Flexi Pay Program | Special interest rate repayment schemes for large credit card purchases. | NO interest OR Lowest interest rate AND Lowest minimum amount. |
| Convetional/ IslamIslamic | Islamic financing works only with halal merchants. | If you do not have a preference, choose conventional because they have more flexibility. |
| Rewards/ Benefits | Additional perks. | 1. Cashback. 2. Petrol benefits. 3. Travel benefits. 4. Reward points. |
Here are more tips for choosing your first credit card:
a) For Those Who Carry Over Monthly Balances
Look to get plain-vanilla credit cards with the lowest financing interest rates. Because any interest you pay on the carry-over balance will offset any perks you could get. Also, compare Easy Pay / Flexi Pay programs which could be useful for larger purchases. You can request a bank to convert a purchase to an Easy-Pay / Flexi-Pay scheme, which puts it on a fixed instalment plan at a special interest rate.
If you are already carrying a sizable balance, many credit cards also offer Balance Transfer Programs which you should consider. Balance Transfer Programs allow you to transfer your balance from your current credit card onto the new card at special interest rates.
b) For Those Who Want To Get Fast Cash Credit card
Your credit card can be used in order to take a cash advance. There are 2 ways. The first is to use your credit card at any ATM to make a withdrawal using the right PIN code. Note that there are 2 costs to consider when using your credit card for such cash advances:
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Cash advance fee (Typically 5% of the total amount)
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The cash advance interest rate is usually 18% per annum calculated on a daily basis.
The 2nd method is to take a cash loan, sometimes known as Easy Cash or Fast Cash or Dial-for-Cash Facility. These loans are taken on your available credit limit, transferred into a current or savings account of your choice, and paid back in fixed instalments over a period. They are the equivalent of a “pre-qualified” Personal Loan. Customers wishing to apply for such facilities are required to call the respective banks and make the request.
c) For The Cost Conscious
Look for credit cards with no annual fees and options to waive government service tax. Other rewards/benefits/programs are secondary.
d) For The Devout Muslim
Look for Islamic Credit Cards. These cards are usable only for transactions with halal merchants.
e) For Everyone Else - Lifestyle Factors
If you’re hardly going to carry over a balance, don’t bother with comparing financing interest rates. Instead, seek out credit cards that provide the rewards/benefits you want. These benefits can roughly be categorized as follows:
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Cash Back benefits – Gives a certain % as a rebate on credit card transactions. The safest bet for those with no preferences.
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Petrol benefits – Gives a high % as a rebate on petrol purchases. For road warriors and travelling salespeople.
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Travel benefits – Usually come with frequent flier miles and airport benefits. Best for frequent travellers.
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Reward Points – Redeemable for gifts and other rewards. For the heavy spenders and shopaholics.
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Merchant Tie-Ins / Co-branding – Special promotional programs with selected merchants. For those with specific wants.
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Sign Up Rewards – Limited-time promotional rewards for signing up a credit card with the bank. If nothing, go for cards with attractive sign-up promotions.
Other Credit Card Tips:
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Avoid applying to get too many credit cards at the same time. It paints a negative picture of your credit profile.
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If you have no credit history in Malaysia (E.g. Car loan / housing loan / personal loan/overdraft facility), have at least 1 credit card. It helps burnish your credit profile.
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Credit cards have among the highest financing interest rates of all credit facilities. Try to pay off all credit card balances promptly.
So, remember…
When choosing a credit card, one must look into all the various dimensions and then decide which card suits your lifestyle before applying. As long as you remember to pay off your balances on time, getting a credit card can really open you up to a world of convenience and benefits with hardly any drawbacks!
*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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