How To Choose The Best Credit Card That Suits Your Needs

Using the wrong tool for the job could cause a lot of pain, tears and wasted effort. After all, you wouldn’t use a wrench to drill a hole.

The same goes for your credit card. While it’s a great tool for earning rewards and maximising savings, using the wrong type of card could mean missing out on important benefits. You’ll want to choose a card that fits your lifestyle and spending habits. Here’s what you need to know about choosing the right card:

1. Why do you want a credit card?

The right credit card for you depends on your needs:

• Build your credit score. Having a good credit score increases your chances of being approved for car loans, home loans and better credit cards. If you’ve just started working, you may not have a credit score yet; so getting your first card (and consistently repaying your balances) can help you build your score. Look for a card with low minimum requirements to increase your chances of approval.
• Manage debt. If you need to consolidate your debt under a single payment, or if you need to carry over your balances to the next month, look for a balance transfer credit card with a low or 0% interest rate. But you should only get a balance transfer card if you are certain you can repay your balances within the promotional period – otherwise, you can incur high penalties.
• Cover emergencies. If you just need a credit card in case you need to cover unexpected emergencies, consider a low-interest credit card that doesn’t charge any annual fees.
• Earn cashback and rewards. Look for a card that gives you generous cashback or miles, or one that has a good rewards programme.

2. What kind of rewards do you want?

Credit card rewards come in three flavours. You’ll have to choose which is most important to you:

	Cashback	Miles	Points
Pros	A percentage of your purchase is rewarded back to you in cash. There is no expiry.	You earn a number of miles per ringgit of purchase. Miles are like points, but they can be used to redeem flights or offset the price of a flight ticket.	Some credit cards offer generous point bonuses. Points can be used to redeem items, vouchers, cashback or miles from your credit card issuer’s reward catalogue.
Cons	There is usually a limit to the amount of cashback you can earn monthly. You may also have to meet spending requirements to get the best rates.	It can take a long time to accumulate enough miles for a flight. Your miles can also expire.	Some catalogues don’t have great rewards.
Best for spenders who	Prefer cash or want to cut costs on existing expenses.	Are frequent travellers.	Want the flexibility to exchange points for cash, miles or gifts.

3. What do you usually spend on?

Next, consider your biggest monthly expense. Do you mainly spend on groceries and daily essentials, or do you spend more on dining out and takeaway? Some credit cards give you more rewards for spending on these categories:

• Petrol
• Groceries
• Shopping
• Dining
• Travel

Getting the right credit card that matches your spending habits is important, otherwise you’ll miss out on potential rewards. For example, the Citi Cash Back Card offers up to 10% cashback per month on petrol, groceries and dining, as well as 0.2% cashback for other categories. This makes it great for those spending on daily essentials and eating out. But if you don’t spend much on these expenses – let’s say you’re more of an online shopper – you’ll probably want to get another card that gives you bigger rewards for shopping.

4. To fee or not to fee

Some credit cards come with annual fees, while others don’t:

• Annual fees. Fees can range from RM60 to RM1,000 a year, so you’ll want to make sure that your card’s benefits or rewards can justify these fees. However, your bank may waive your annual fees if you’ve been consistently paying your balances every month. Just call your credit card issuer and ask for a fee waiver.
• No annual fees. Some cards require you to hit a certain amount of spending before you’re applicable for the fee waiver; others simply don’t charge any fees. No-fee credit cards can be a great savings tool, as they help you earn cashback or rewards on existing spending, at no charge.

But keep in mind that you’ll still have to pay a RM25 Sales and Service Tax (SST) every year, whether or not your card charges a fee.

5. Read the fine print

Before you sign up for a credit card, you’ll need to know exactly what you’re getting into, otherwise you could get hit by unexpected fees. Get the following information from the credit card’s product disclosure sheet:

• Finance charges: This refers to the interest rate you have to pay on your credit card debt. This is typically tiered; if you have been making prompt repayments, your finance charges may be lower.
• Late payment fee: You must pay a late payment fee if you do not repay your debts in time.
• Cash advance fee: This is the fee you must pay if you withdraw money from the ATM using your credit card.
• Currency conversion fee: This fee is imposed for transactions made in foreign currencies.
• Spending requirements: To be eligible for the advertised amount of cashback, miles or rewards points, you may need to spend a certain amount on your card, so remember to check the terms and conditions before you sign up.

6. What do you qualify for?

Found the credit card of your dreams? Unfortunately, it might not feel the same way. To get your credit card application approved, you’ll need to meet certain requirements:

• An income requirement – each credit card has a different income requirement, but you’ll need an annual income of at least RM24,000 to qualify for any credit card
• Proof of consistent income (income tax form, salary slips and bank statements)
• Aged 21 years old or above
• Have good credit health – a higher credit score gives you a better chance of getting approved

If your application gets rejected, don’t despair. There are a few things you can do to increase your chances of getting your next application approved.