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Malaysia is introducing a new kind of credit card aimed at making borrowing less expensive
Announced by the Ministry of Finance (MOF) last week, the new "basic" credit card is part of a wider collaboration between the government, Bank Negara Malaysia (BNM), and the banking industry to improve access to affordable credit for individuals and micro, small, and medium enterprises (MSMEs).
Prime Minister Datuk Seri Anwar Ibrahim, who also serves as Finance Minister, said financial institutions have an important role in helping Malaysians cope with rising living costs and cash flow challenges through "prudent, agile, and humane solutions".
Applications are expected to open in October 2026, with banks including Maybank Islamic, RHB Bank, and CIMB Islamic already confirming they'll be introducing their own versions.
So what exactly is a "basic" credit card?
If you've ever looked at a credit card brochure and been tempted by cashback, air miles, or shopping rewards, this card is almost the complete opposite.
Instead of competing through lifestyle rewards, premium privileges, or cashback offers, it strips away those extras in exchange for lower borrowing costs and simpler features.
Among the key features announced are:
- A maximum financing rate of 14% per annum, compared with the current industry cap of 18%
- No annual fees
- More controlled credit limits based on a customer's repayment capacity to encourage responsible borrowing
- Free balance transfers, allowing existing credit card users to move outstanding balances from higher-interest cards without paying processing or transfer fees
In short, the card is meant to function more as a financial safety net than a lifestyle product.
Image for illustration purposes only.
Image via Amr Bo Shanab/Connect Images/AFPThe biggest selling point is the lower financing rate
The standout feature is the 14% financing rate, but that only matters if you don't pay your credit card bill in full.
A financing rate is essentially the cost of borrowing money through your credit card. If you settle your entire statement balance before the due date, you won't pay any financing charges. However, if you leave part of the balance unpaid, the bank charges financing on the remaining amount until it's fully repaid.
Because the new basic credit card caps that rate at 14% instead of up to 18%, carrying a balance becomes less expensive than it would be on many existing cards.
Some banks are adding extra protections too
One of the first products announced is RHB's Sinar Credit Card-i, an Islamic credit card that follows the government's basic credit card framework.
Besides the lower 14% retail transaction profit rate and no annual fee, RHB said the card will also feature non-compounding finance charges.
Unlike conventional credit cards that charge interest, Islamic credit cards use what's known as a profit rate, although it works similarly from a customer's perspective by determining the cost of carrying an unpaid balance. Non-compounding finance charges also mean customers won't be charged financing on previously accumulated financing charges, making debt easier to manage over time.
Further eligibility details will be announced closer to its October launch.
Experts say the lower rate shouldn't be mistaken for "cheap debt"
While consumer groups have welcomed the initiative, they also warned that a lower financing rate does not make borrowing risk-free.
UCSI University associate professor in finance Dr Liew Chee Yoong told the New Straits Times that the card could benefit lower and lower-middle-income earners, young workers building their credit history, and those facing temporary cash flow issues.
However, he stressed that lending decisions should continue to be based on borrowers' actual repayment capacity rather than simply making credit more accessible.
His comments come as Malaysia's household debt stood at 84.8% of GDP at the end of 2025, according to BNM.
Meanwhile, Federation of Malaysian Consumers Associations (FOMCA) chief executive officer Dr Saravanan Thambirajah said the concern isn't the product itself, but how consumers choose to use it.
He warned that a cheaper financing rate could create the false impression that it's acceptable to borrow more, even though the debt still has to be repaid.
According to the English daily, he said that credit should help people deal with temporary financial shortfalls, not become a substitute for regular income.
Image for illustration purposes only.
Image via Amr Bo Shanab/Connect Images/AFPEven with lower financing charges, one habit can still cost you
Experts also reminded consumers that paying only the minimum amount due each month can still result in financing charges accumulating over time.
While the new card reduces the cost of carrying unpaid balances, it doesn't eliminate that cost.
To encourage more responsible borrowing, experts have suggested that banks accompany the rollout with stronger consumer safeguards, such as clearer repayment illustrations, affordability assessments based on disposable income, and app or SMS alerts when customers approach their credit limits or miss repayments.
The consensus is that the new basic credit card could become a useful financial buffer during emergencies, but only if it's treated as one.
A lower financing rate may reduce the cost of borrowing, but it doesn't change the basic rule of credit cards: the less balance you carry, the less you'll ultimately pay.
