Credit cards are financial tools that allow you to complete retail purchases without using cash. Malaysian lending institutions offer conventional and Islamic credit cards. Islamic credit cards charge a profit rather than an interest rate. You can borrow credit up to the tune of twice your monthly salary on credit cards and withdraw a specified cash advance of the total debt amount when you apply for a credit card.

However, credit cards have specific terms and conditions alongside their privileges and rewards like cashback and reward points for spending. Some credit cards charge an annual fee, while others have no annual feel attached. 

Banks utilize a tier system based on annual income to decide whether you qualify for a specific credit card. The lowest tier is the gold credit card, followed by the platinum credit card and an infinite credit card for Malaysian with the highest annual income.

Credit cards are an invaluable financial tool if used wisely. Below is an overview of the benefits of a credit card in personal finance.

• First, credit cards allow the cardholder to establish a credit history and raise their credit score. They are especially useful for supplementary cardholders whose age locks them out of conventional loans. 
• Second, they allow individuals to supplement their income, especially with the cash advance feature.
• Third, cardholders earn rewards and privileges, including redeemable reward points and cash back on specified retail categories.
• Mastercard and Visa credit cards enjoy global acceptance and allow cardholders to shop for items overseas. Moreover, some credit cards give bonus reward points on your overseas spending.
• Credit cards allow you to cater to financial emergencies
• Some credit cards give back to the community via charities.

However, credit cards are only helpful if used wisely by paying the debt on time and maintaining a low debt-service ratio (DSR).

A Malaysian citizen can either apply for a credit card as a principal card owner or a supplementary card holder. Malaysian banks require that you must be at least 21 years old when you apply for a credit card as a principal cardholder and at least 18 years old as a supplementary cardholder. However, banks and other lending institutions may impose other terms and conditions, including a minimum annual income.

The principal card is the primary card you apply for directly with the bank or lending institution and will be exclusively accessible to the primary cardholder. On the other hand, a supplementary card differs from the principal card in that it is a second-tier card tied to a primary card.

Therefore, the principal cardholder can assign the supplementary card to a secondary cardholder like a family member (spouse, children, parents) or other trusted parties. The principal card has a higher age limit (21 years) than a supplementary card (18 years), and a supplementary card leverages a good credit history but is exempt from a bad credit history.

The Central Bank of Malaysia dictates that anyone applying for a principal credit card must have an annual income of at least RM 24000 and can pay the debt back to the bank. Moreover, it states that if, for some reason, you cannot declare how much you make annually, you must deposit an amount equal to the credit card’s limit during your application, or you will not qualify for the credit card. The rule applies to conventional and Islamic credit cards.

Malaysia’s central bank dictates that any Malaysian with an annual income not exceeding RM36000 is eligible for a credit card not exceeding two and a half times their monthly income. The rule applies to all lending institutions, including those issuing Islamic credit cards. 

However, banks make exceptions for individuals with an annual income above RM36000 and decide the credit card limit for such applications. Therefore, the credit limit on credit card applications for all Malaysians depends on their annual income.

Your annual income also dictates the maximum number of credit cards you can have under your name. Bank Negara Malaysia dictates that all Malaysians earning an annual income below RM36000 can only have credit cards from two lenders (banks or otherwise).

On the other hand, you can have as many credit cards as lenders are willing to give if your annual income exceeds the stipulated income bracket. Nonetheless, you can apply for more than one credit card in the same bank or lending institution, provided they will be willing to accept your application.

The interest rate, or profit rate in Shariah-compliant Islamic credit cards, varies among lending institutions. Moreover, lenders add an interest rate on the outstanding balance when the cardholder delays or defaults on payment. Lender terms and conditions also include other interest rates, including an interest rate on a balance transfer and a cash advance on a credit card.

The minimum monthly repayment plan depends on the total debt owed on your credit card. However, a cash advance on credit cards carries a minimum monthly payment of no less than 5% of the total amount. Nonetheless, you can use Loanpanda to compare the minimum repayment amount on different credit cards and choose the best amount for you.

Banks and other lenders dictate the maximum cash withdrawal, expressed as a percentage, that you can make on your credit card in the form of a cash advance. However, a cash advance includes an additional interest rate besides the interest or profit rate per annual on the credit card.

Banks and other credit card companies impose an interest rate as a penalty on all delayed payments. However, Islamic credit cards carry a significantly lower penalty than contemporary credit cards. Nonetheless, missing a payment affects your credit score and can cause lenders to reject your application when you apply for another credit card.

The annual fee varies among lending institutions. Moreover, some credit cards like Maybank Islamic and RHB Islamic credit cards do not charge an annual fee. Also, other credit cards

base the annual fee on certain terms and conditions, including waiving the fee if you achieve the stipulated minimum spending.

alaysia’s banks and credit card companies typically issue globally acceptable credit cards, including Mastercard, Visa, American Express, and Platinum-i credit cards.

Use LoanPanda to compare and establish the necessary documents and other terms and conditions for each credit card type.