At some point in your life, most people would probably realize that it’s worthwhile to at least have a Credit Card, Debit Card, or a Charge Card. So let’s say you’re looking for a credit card, which one should you get? What aspects should you compare? This article breaks it all down for the confused shopper.
These are the aspects one should consider and compare when choosing a credit card.
For Those Who Carry Over Monthly Balances
Look for plain-vanilla credit cards with the lowest financing interest rates. Because any interest you pay on 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 Easy-Pay / Flexi-Pay scheme, which puts it on a fixed installment 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 cards onto the new card at special interest rates.
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:
Look for credit cards with no annual fees and options to waive government service tax. Other rewards / benefits / programs are secondary.
Look for Islamic Credit Cards. These cards are usable only for transactions with halal merchants.
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 rewards / benefits you actually want. These benefits can roughly be categorized as follows:
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!
These are the aspects one should consider and compare when choosing a credit card.
For Those Who Carry Over Monthly BalancesLook for plain-vanilla credit cards with the lowest financing interest rates. Because any interest you pay on 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 Easy-Pay / Flexi-Pay scheme, which puts it on a fixed installment 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 cards onto the new card at special interest rates.
For Those Who Want To Fast Cash
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:
- Cash advance fee (Typically 5% of the total amount)
- Cash advance interest rate 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 installments 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.
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.
For The Devout Muslim
Look for Islamic Credit Cards. These cards are usable only for transactions with halal merchants.
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 rewards / benefits you actually want. These benefits can roughly be categorized as follows:
- Cash Back benefits – Gives a certain % as rebate on credit card transactions. Safest bet for those with no preferences
- Petrol benefits – Gives a high % as rebate on petrol purchases. For road warriors and travelling sales people
- Travel benefits – Usually comes with frequent flier miles and airport benefits. Best for frequent travelers
- Reward Points – Redeemable for gifts and other rewards. For the heavy spenders and shopaholics
- Merchant Tie Ins / Co-branding – Special promotional programs with selected merchants. For those with specific wants
- 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
- Avoid applying to too many credit cards at the same time. It paints a negative picture of your credit profile
- 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
- Credit cards have among the highest financing interest rates of all credit facilities. Try to pay off all credit card balances promptly.
Conclusion
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!
