Issued by banks like HSBC or consumer finance companies like AEON Credit, credit cards in Malaysia behave in the same way as they do in other countries. Credit cards are plastic cards that given out to consumers (also referred to as cardholders) to buy goods and services on credit or receive cash advances. The issuer typically limits the maximum amount a month that can be spent on the credit card. This is known as the credit limit and is normally based on the cardholder's monthly income.
The main parties that are involved in the credit card transaction are
Cardholders: You or any other authorized persons (e.g. supplementary cards given to children and spouses) who can use the credit card to make payment for goods and services.
Card Issuers: These are the institutions that issue the credit cards. Banks and consumer finance companies are the main credit card issuers in Malaysia.
Credit Card Organisation: These are organisations that license card issuers to issue credit cards and act as settlement intermediaries between card issuers and merchant acquirers. Visa, MasterCard, China UnionPay and Japan Credit Bureau (JCB) are all global credit card organizations that are active in Malaysia.
Merchant Acquirers: Institutions, usually local banks, that process credit card transactions for merchants. They usually provide the merchant with a point-of-sales terminal which automates and authorizes the credit card transaction.
Merchants: Firms that sell products or offer services and accept credit cards as a form of payment. Millions of retailers around the world accept credit cards, making them truly a very convenient payment method.
In Malaysia, most of the major retailers and restaurants accept credit cards. However it is not uncommon for smaller shops and diners to offer better prices if you decide to pay in cash or they might charge an extra fee for a credit card transaction. It is best that you check if there any additional credit charges when you are bargain hunting!
What are the Major Types of Credit Cards available in Malaysia?
Private Label (Store) Credit Cards: Sometimes, banks might work with large merchants (usually large department stores or retail chains like Harvey Nichols) to directly issue private label credit cards. Cardholders usually enjoy exclusive deals from the partnering merchants. Note that these cards usually do not carry a credit card organisation logo like Visa logo. Private label credit cards are not usually widely accepted and you are usually restricted to use the credit card in stores that associated with the issuing merchants.
What are Cash Back Rebates and Loyalty / Reward Points?
Most credit card issuers offer some incentives to attract and reward loyal cardholders. Two of the more popular incentives are cash back rebates and loyalty points.
Cash Back Rebates: Every time you spend with your credit card, you will be eligible for a predetermined rebate amount on your transaction. After a period of time, usually a year, the accumulated rebate amount will be credited to your credit card account. The cash back rate is generally around 1% to 2% but a wide range of cash rebate terms will apply. For example, cash rebates may be tiered by spending categories i.e. higher rebates on dining spending than retail spending. Alternatively the cash back rates might be tiered based on cumulative spending over a certain time period. There are even issuers that offer higher cash rebates on overseas and online spending.
Please refer to our table that provides a summary comparison of all the cash rebate terms in order to select the best option based on your spending habits and needs
Loyalty / Reward Points: The loyalty scheme is similar to cash back rebate except that you are rewarded with loyalty/reward points instead of a cash rebate. Depending on the card issuer, the loyalty/reward points can be redeemed either as frequent flier miles or gifts (e.g. consumer electronics goods). Note that different card issuers have varying terms when it comes to redeeming your loyalty/reward points. Some card issuers allow accrued loyalty/reward points to be carried forward indefinitely and others have an expiry period after which unredeemed points are forfeited.
Please check our comparison table for a quick summary and details of the incentives offered by the card issuers.
What are the important things that I need to keep in mind when choosing and using a credit card?
We at BolehCompare are all about helping you manage your personal finances better. With our comparison engine, we have made it easy for you to research and the compare the best credit card offers in Malaysia. Use BolehCompare and find the credit card that offers the most competitive rates and that meets your personal needs!