Everything You Need to Know About Credit Cards in Malaysia

What Are Credit Cards?

A credit card is a financial tool that allows you to borrow money up to a specific limit to make purchases or pay bills. Instead of using cash or debit, you’re essentially borrowing from the bank and repaying it later, often with added perks like cashback, rewards points, or air miles.

To understand credit cards better, here are a few key terms:

1. Credit Limit

   The maximum amount you can spend using the card.

2. Interest Rates

   The percentage charged if you carry a balance beyond the billing cycle.

3. Balance Transfer

   A feature allowing you to transfer balances from one credit card to another at lower or zero interest.

4. CashXcess

   Withdraw fast cash of up to 80% of your credit limit, putting your mind at ease when you need financial assistance.

5. Dial-An-Instalment

   Convert your purchases into affordable monthly instalments.

6. Rewards

   Points, cashback, or benefits earned for spending with the card.

Why Do You Need a Credit Card?

Credit cards aren’t just for shopping—they’re powerful tools that can add value to your financial life when used responsibly.

Building Credit History

Your credit score is crucial for future financial needs like loans or mortgages. Responsible use of a credit card—paying your balance on time and staying within your limit—helps build and maintain a positive credit score.

Convenience and Security

Carrying cash is risky and cumbersome, especially for large purchases. Credit cards are safer and come with fraud protection, ensuring your money is secure even if the card is lost or stolen.

Reward Programs

Many credit cards in Malaysia offer generous rewards, from cashback on dining and shopping to air miles for frequent travellers. For instance, the RHB Rewards Credit Card earns points on every ringgit spent, perfect for reward-seekers.

Emergency Access to Funds

Unexpected expenses can strike at any time. Credit cards serve as a financial safety net, giving you immediate access to funds without depleting your savings.

How Credit Cards Work

Understanding the mechanics of credit cards is crucial for making the most of their benefits and avoiding potential pitfalls. Here’s a closer look at how they function:

The Payment Process

When you use a credit card to make a purchase, the bank acts as an intermediary. For example, let’s say you’re buying groceries worth RM300 at a supermarket. When you swipe your credit card, the bank pays the merchant on your behalf instantly. This allows you to walk out with your items while deferring payment to a later date.

At the end of the billing cycle, the bank sends you a statement summarising your transactions. You then repay the bank either in full or in instalments. Paying in full helps you avoid interest charges while paying partially incurs additional costs. Think of your credit card as a short-term loan with perks—provided you manage it wisely.

Understanding the Billing Cycle

Every credit card comes with a billing cycle, usually lasting about 30 days. This is the period during which your card tracks all transactions. For instance, if your billing cycle starts on the 1st of the month and ends on the 30th, every swipe, online payment, or cash advance during this period will appear in your statement.

Once the billing cycle ends, the bank gives you a grace period (typically 20 days) to settle your dues. Let’s say you spent RM1,000 during the cycle. If you pay the full amount before the due date, you avoid interest charges. Missing the deadline, however, triggers late payment fees and interest on the outstanding balance, which can escalate quickly.

The Interest-Free Period

One of the most attractive features of credit cards in Malaysia is the interest-free period. This window, usually between 20 to 30 days after the billing cycle ends, gives you a chance to repay your balance without incurring additional charges.

For example, if your billing cycle ends on the 30th and your due date is the 20th of the following month, you can pay off your balance any time before the 20th without paying interest. This is why financial experts often advise paying your balance in full during this period. It’s like using the bank’s money for free—if you’re disciplined.

Pros and Cons of Using a Credit Card

Pros

1. Financial Flexibility

   Spread large purchases over time.

2. Rewards and Perks

   Enjoy discounts, cashback, and points.

3. Build Creditworthiness

   Establish a positive credit history for future loans.

Cons

1. Overspending Risk

   The ease of spending can lead to debt.

2. High Interest Rates

   Carrying a balance can be costly.

3. Fees

   Annual charges, late payment penalties, and cash advance fees.

Interest Rates and Fees

Banks in Malaysia calculate interest based on the outstanding balance carried forward after the due date. The rates typically range from 15% to 18% annually.

Common fees include:

1. Annual Fees

   Often waived for the first year or upon meeting spending criteria.

2. Cash Advance Charges

   Fees for withdrawing cash using your credit card.

3. Late Payment Fees

   Penalties for missing due dates.

To avoid these costs, pay your balance in full every month and keep track of your spending.

Key Features of RHB Credit Cards in Malaysia

1. Balance Transfer on Credit Card

   Transfer outstanding balances to another card with lower interest. This helps consolidate debt and save money.

2. Rewards Systems

   Earn cashback, points, or air miles for every ringgit spent.

3. Travel Perks

   Enjoy lounge access, travel insurance, and discounts on bookings.

4. E-wallet Compatibility

   Many credit cards in Malaysia integrate with platforms like GrabPay and Touch ‘n Go.

5. CashXcess

   Withdraw fast cash of up to 80% of your credit limit, putting your mind at ease when you need financial assistance.

6. Dial-An-Instalment

   Convert your purchases into affordable monthly instalments.

Types of Credit Cards in Malaysia

1. Basic Credit Cards

   Ideal for first-time users with low annual fees.

2. Rewards Credit Cards

   Perfect for everyday use.

3. Premium Credit Cards

   Offer exclusive perks, especially for frequent travellers such as unlimited lounge access.

4. Islamic Credit Cards

   Shariah-compliant options such as the RHB Islamic Credit Card-i.

RHB Credit Cards Overview

RHB offers a range of credit cards tailored to various lifestyles:

1. RHB Rewards Credit Card

   Earn up to 10x Loyalty Points for every ringgit spent, redeemable for travel, vouchers, and more.

2. RHB Cash Back Credit Card

   Enjoy up to 10% cashback on Online Dining/Grocery and more.

3. RHB Visa Infinite Credit Card

   Get travel perks like airport lounge access and travel insurance.

4. RHB Islamic Credit Card-i

   Shariah-compliant with cashback benefits.

How to Choose the Right Credit Card

Choosing the right credit card isn’t just about finding one with flashy perks—it’s about aligning the card’s features with your spending habits and financial goals. In Malaysia, where consumer habits vary widely, understanding how a credit card fits into your lifestyle is key. Let’s break down the steps to ensure you make the best decision.

Analyse Your Spending Habits

Your spending patterns are the foundation of selecting the right credit card. For example, if you frequently shop for groceries or dine out, a card with high cashback rewards will give you the most value.

For online shoppers, a card like the RHB Rewards Credit Card is ideal. With higher Loyalty Points earned on e-commerce purchases, you can redeem rewards such as vouchers or merchandise, turning every purchase into a win.

Consider Travel Perks

If you’re a frequent flyer, travel-centric cards can save you a fortune and elevate your experience. Perks like air miles, free travel insurance, and access to airport lounges can make your trips smoother and more rewarding.

Example: Lisa, an executive from Johor Bahru, travels for work monthly. By using the RHB Visa Infinite Credit Card, she earns air miles for every ringgit spent. Over a year, her accumulated air miles cover a round-trip flight to Singapore, while her complimentary airport lounge access ensures a stress-free travel experience.

For occasional travellers, look for cards that offer travel insurance or discounts on hotel bookings. These features provide peace of mind and savings without requiring frequent use.

Understand Fees and Interest Rates

Fees and interest rates can quietly eat into the benefits of a credit card if you’re not careful. Pay attention to annual fees, finance charges, and penalties to avoid surprises.

For those who occasionally carry a balance, choose a card with a lower interest rate or consider balance transfer options to avoid excessive finance charges.

Look for Balance Transfer Features

Balance transfer cards can help you manage existing debt by consolidating balances from other credit cards at a lower or zero interest rate. This feature is especially useful for Malaysians looking to reduce financial stress.

Example: Hafiz, a freelance graphic designer in KL, had RM5,000 in credit card debt with a 15% annual interest rate. By transferring his balance to an RHB Credit Card/-i with a low-interest balance transfer offer for 12 months, he can pay off his debt faster.

Evaluate Rewards and Cashback Systems

Rewards systems are where you truly see the benefits of your card. Cashback, loyalty points, or air miles can significantly reduce your expenses or fund indulgences like travel or gadgets.

Example: Sarah, a young professional in Melaka, earns RM3,000 monthly and spends RM800 on fuel and groceries. Using the RHB Cash Back Credit Card, she could earn up to 5% cashback on these categories. However, the cashback is capped at RM10 per category per month. This means Sarah could earn a total of RM20 in cashback each month across fuel and groceries, amounting to RM240 annually.

Despite the limit, it still offers meaningful savings that can offset part of her monthly expenses. For budget-conscious Malaysians like Sarah, this card provides a steady way to save on essential spending categories.

Match the Card to Your Financial Goals

Once you understand your habits, align them with a card that supports your financial aspirations. Are you looking to build a strong credit history? Go for a basic credit card with a low credit limit to avoid overspending. Are you aiming to maximise rewards? A premium card with higher earning rates might be worth the annual fee.

Check Eligibility Requirements

Finally, ensure you meet the card’s eligibility criteria. Malaysian credit cards typically require a minimum monthly income ranging from RM2,000 to RM10,000, depending on the card tier. Prepare documents like your MyKad, proof of income, and recent utility bills to speed up the application process.

How to Apply for an RHB Credit Card

Applying for an RHB Credit Card Malaysia is simple:

1. Visit the RHB Credit Card Portal.
2. Review the card options and choose the one that fits your needs.
3. Check eligibility requirements and prepare necessary documents.
4. Submit your application online or at an RHB branch.

Conclusion

Credit cards are powerful financial tools that, when used responsibly, can enhance your lifestyle and financial health. Whether you’re looking for rewards, cashback, or travel perks, RHB’s diverse range of credit cards in Malaysia offers something for everyone.

Ready to find the best credit card in Malaysia for your needs? Explore RHB’s offerings today and take the first step towards smarter financial management. Visit RHB Credit Cards to get started.

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For avoidance of doubt, RHB Islamic Bank only promotes and manages promotions in relation to RHB Islamic Bank products and its related proposition only.