A credit card is a payment card issued by a financial institution (usually a bank) with a credit limit that allows cardholders to make purchases and pay for them at a later date.

There is no right or wrong as to whether or not you should apply for a credit card. Some of the common reasons people apply for a credit card include:

• Build Credit Record
If you plan to make a big purchase with loans, such as a house or a car, you will need a good credit rating to qualify for the loan. Having a credit card with payments duly made on a monthly basis can help to boost your credit score and increase the chances of getting your loan approved.
• Earn Rewards
Credit cards come with a variety of perks and rewards, including cash back, rewards points and air miles.
• Accepted Internationally
Credit card payment is accepted globally. You do not need to worry about not having enough local cash when you travel overseas.
• Emergency Purpose
You never know when you would need immediate cash to cover unexpected events like medical emergencies, car repair expenses, loss of job, running out of cash when travelling, etc. In times like this, a credit card is the fastest option for many to get immediate access to funds.
• Cash Flow Management
Having a credit card allows you to better utilise your cash on the more urgent needs. Besides, you can also refer to your monthly statement to keep track of your purchases and monitor your spending.

The principal cardholder should be at least 21 years old to apply for a credit card; whereas the supplementary cardholder should be at least 18 years old.

A principal card is the main credit card held by the principal account holder, whereas the supplementary card is an additional card issued under the principal account holder. Normally, a supplementary card is extended to the principal cardholders’ parents, spouse, children above the age of 18, family members, or other trusted parties.

According to the Bank Negara Malaysia guidelines, the minimum income for a first-time principal card applicant should be at least RM24,000 per annum. If the applicant is unable to prove his/her annual income, he/she shall place a fixed deposit of an amount equivalent to the credit limit granted.

According to the Bank Negara Malaysia guidelines, the maximum credit limit extended to a principal cardholder who earns RM36,000 per annum or less shall be 2x his monthly income per issuer (per bank). This is applicable to both existing and new cardholders, but is not applicable to retirees.

For cardholders earning more than RM36,000 per annum, the bank will have the discretion as to how much credit limit to approve.

According to the Bank Negara Malaysia guidelines, a cardholder can only hold credit cards from a maximum of 2 issuers (financial institutions or banks) if he/she is earning RM36,000 per annum or less.
There is no limit to the number of credit cards a cardholder can own if he/she earns more than RM36,000 per annum.

Credit cards charge interest on the outstanding amount when cardholders do not repay their spending on time. Credit card interest rates, known as finance charges as per Bank Negara Malaysia guidelines are as follow :
(a) Finance charges for retail transactions shall be capped as follows:

1. (i) Tier-I (cardholders who promptly pay the minimum amount for 12 consecutive months) :
Maximum of 1.25% per month, which is equivalent to 15% per annum, of the total outstanding balance;
2. (ii) Tier-II (cardholders who promptly pay the minimum amount for 10 months or more in a 12-month cycle) :
Maximum of 1.42% per month, which is equivalent to 17% per annum, of the total outstanding balance; and
3. (iii) Tier-III (cardholders who do not fall within the above tiers) :
Maximum of 1.5% per month, which is equivalent to 18% per annum, of the total outstanding balance.

(b) Finance charges for cash advances shall be capped at a maximum of 1.5% per month, which is equivalent to 18% per annum

Cardholders are required to pay :

1. (i) At least 5% of the total amount outstanding
2. (ii) The total amount of the contracted monthly instalments of any easy payment plan (EPP) and balance transfer plan (BTP)
3. (iii) The contracted monthly term loan instalment for any automatic balance conversion (ABC)

Yes, cash advance is a facility available to a cardholder to withdraw cash at a withdrawal fee and interest rate of 18% per annum.

The late payment charge shall be the lower of 1% of the outstanding balance or RM100. If an issuer intends to set a minimum late payment charge, it shall not exceed RM10.

Some credit cards do not have an annual fee, whereas there are also credit cards with an annual fee that may or may not be waived upon conditions. Do note that a service tax of RM25 will be charged on each new or renewed primary and supplementary credit card.

VISA, MasterCard and American Express are the main credit card and payment networks commonly used.
Generally, the credit cards are often categorised according to their features and functions :

• Cashback
• Rewards
• Air Miles
• Business
• Student
• Low-interest

If you are a new applicant, you are generally required to submit :

• IC photocopy
• Employment letter
• 3 to 6 months’ payslip
• 3 to 6 months’ bank statement (Tally with payslip)
• EA Form (or SSM)
• Personal income tax with payment receipt