Still Don't Have A Credit Card? Here's How To Choose The Right One For You

It is important to take your time to decide on the right credit card to start with.

Cover image via Avery Evans / Unsplash

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It can feel a little out of place if you still don't own a credit card in your adult life

Owning a credit card can be considered as a milestone in your adulting life. It's a sign that you are ready for bigger financial responsibility and most importantly, it is a useful financial tool to utilise when it comes to managing your finances.

One has to be smart though. It is important to take your time to decide on the right credit card to start with. A little thought definitely goes a long way.

Here are some tips on how to choose the right credit card for you:

Step 1: Identify why you need a credit card

Before signing up for your first credit card, the most important question is identifying why you need it in the first place.

It may differ from one person to another, but in general. these are the common reasons why you should own at least one credit card:

1. It helps you build a healthy credit score
When you are committed to clearing your credit card balance on time, it proves to financial institutions that you are a reliable paymaster. This is you building a healthy and positive credit score. When it is time to apply for loans (e.g. personal loan, business loan), you are more likely to be approved for it.

2. You can use it for emergencies or when you need fast cash
A credit card allows you to withdraw cash quickly whenever you need it, especially in emergency cases where you need immediate cash flow. You can also use a credit card to pay  for something urgently (given that you have enough credit balance).

3. It gives you convenient methods of payment (installment facility, cashless transactions, etc.)
A credit card gives you a convenient way to pay for goods and services, where some
merchants allow you to make installments, especially on big purchases. It also allows
you to make cashless transactions, so you don't have to fumble for bank notes and coins when paying.

4. You're rewarded for spending on your needs
Since you are going to spend on your daily needs anyway (e.g. petrol, groceries, bills),
why don't you get rewarded for your spending? A lot of credit cards offer cash backs, bonus points, and collaborations with brands when you spend. These are quite appealing and smart ways to spend.

With all that said, of course, getting a credit card comes with being responsible in managing your debts and making sure to pay your card bills on time so that it won't backfire on you.

Make sure you understand all the terms and conditions that come with the card, as well as all the fees involved, such as annual fees, cash advance fees, and late fees.

Step 2: Choose a card that matches your spending habits and lifestyle

There are so many options for credit cards in Malaysia, so take your time to evaluate your choices so that you can choose one that matches your spending habits and your lifestyle.

For newbies, these are the most popular credit card types to begin with:

1. Cashback

A cashback credit card converts your spending into cash rebates. The rate depends on the credit card and bank. Check out our compilation of the top five cashback credit cards available in Malaysia.

Some may prefer having a cashback credit card because the benefits can be enjoyed immediately when the bill is due. Compared to a rewards card, there's no need to check your points balance and apply for redemption (which eventually does not happen due to the hassle).

A pro-tip to benefit from a cashback is to avoid carrying a balance on your card, because the interest charges and compounding effect on the unpaid balance can negate any cashback that you have earned.

2. Rewards

A rewards credit card allows you to accumulate points for every ringgit you spend. You can use these points to redeem gifts, goods, and services vouchers.

However, you need to track how many points you have earned, and make an effort to redeem it before it expires or before you forget. How much you can redeem depends on how many points you have accumulated.

Besides these two, there are also Islamic cards, which are shariah-compliant without gharar (overcharging) and riba (interest). They also come with takaful coverage and zakat services.

You can also consider an Airmiles card if you travel a lot, whereby these credit cards collaborate with airline brands to reward you with air miles every time you spend with it.

Step 3: Know how to maximise your rewards and use them strategically

You need to stay informed on how your credit card works and make it work efficiently for you.

There are also additional things to consider, such as whether the card offers no annual fees (waiver), sign-up offers, insurance coverages and brand collaborations (where you can shop and earn more rewards if you choose that brand).

Take some time to read their terms and conditions to find out other bonus perks too, such as access to travel lounges.

Need more tips? We have a comprehensive guide on how to make your credit card work for you.

Now that you know better, we hope this guide will help you decide on your first credit card

Just like any other financial matters, it always pays to be smart and prudent about using your credit card to ensure that it works towards achieving your financial goals.

A credit card does offer convenience and perks, but always bear in mind that it also needs to be managed responsibly to avoid falling into credit card debts.

All the best!

This story is a personal opinion of the writer and does not necessarily reflect the position of SAYS.

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