What Are Credit Card Types

What Are Credit Card Types

Banks have long since evolved from offering plain vanilla credit cards to specialized credit cards. These specialized credit cards, also known as credit card categories, cater to a specific set of cardholder requirements and needs by providing rewards and benefits tailored to those requirements. Here, we will try and explore the main types of credit cards available in Malaysia:

Cashback credit cards – These cards provide rewards in the form of cash rebates. A small percentage of the card spend is returned back either as cash, cheque or as a credit to the credit card account.

Air Miles credit cards – These cards enable you to convert card spends (on all or select categories) into Air Miles or Reward Points that can then be converted into Air Miles or redeemed against a range of rewards. The earned Air Miles can then be used on the airlines affiliated with the Credit Card to book tickets, get upgrades etc.

Rewards credit cards – These cards have enhanced Rewards Points programs on certain categories of spends or when shopping at select merchant outlets. These Rewards Points can then be redeemed against a range of gifts and benefits.

Petrol credit cards – Some consider them a boon for those not eligible for the Bantuan Rakyat 1Malaysia (BR1M)! Petrol credit cards are of two-types: multi-branded cards which provide discounts on petrol and related spends across multiple petrol stations and co-branded petrol cards which provide discounts only when used at the petrol outlets of the affiliated brand.

Business credit cards – Business credit cards are a great way for businesses including Small and Medium Enterprises (SMEs) to access credit for operational expenses, shore-up cash flows and help make purchases. Not just businesses even professional practitioners like doctors, dentists, lawyers and accountants can apply for and use these cards.

They help keep professional and personal expenses separate, provide a range of reporting and control features and offer specific rewards like business and supply discounts with vendors with whom the business regularly deals, extended warranties and business-related promotions.

Low APR credit cards – Every time you “revolve” the balance on your credit card, you are subject to high interest and other fees. Low interest credit cards are meant for those who are unable to fully repay the balance on their cards; they charge a lower amount on your balances in comparison to other cards.

Dining credit cards – These cards provide a range of deals and offers with a variety of restaurants and provide extra rewards in the form of enhanced rewards points, cashback or discounts whenever you pay with your Dining Credit Card.

Islamic credit cards – These cards operate on Shariah principles. These cards are generally based on the Shariah principles of Tawarruq (commodity contracts), Bai Al’ Inah (sale with immediate repurchase) or Ujrah (payment in exchange for services, benefits and privileges). Islamic cards generally do not levy compounding finance charges. These cards cannot be used for Shariah-prohibited (Haram) transactions like gambling, liquor etc.

Online shopping credit cards, student credit cards etc are some of the newly emerging credit card types.

Top 5 Tips Before Applying for a Credit Card

Top 5 Tips Before Applying for a Credit Card

There are currently 26 credit card issuers in Malaysia and nearly 8.2 million credit cards in circulation as on March 2015*. What this goes to show is the popularity enjoyed by the credit card as a financial tool amongst Malaysians. Hopefully, the following tips that we’ve put together will help you make a wiser credit card application decision:

1. Cards and needs – You must understand that credit cards are not a tool for everyone. Especially if you are prone to impulsive shopping. Or, you are easily tempted to indulge in shopping “deals and offers”. Impulsive or uncontrolled shopping can easily blow holes in your budget / income. Hard as this may sound, if you fall in this category, you are better off keeping away from credit cards, at least, until you have your impulses under some control.

But, if you are not the impulsive type, then try and analyze your spending patterns to identify your biggest spend categories. Then try and find a great card to match up with your high-spend areas.

2. Types of credit cards – There are various types of credit cards available with each type carrying a distinct set of benefits. You have cashback credit cards, air miles credit cards, petrol credit cards, low APR (interest rate) credit cards, co-branded credit cards, dining credit cards, even online shopping credit cards and more.

3. Benefits and privileges – Even though a specific credit card type may predominantly reward a certain type of spend, most credit cards have a whole lot of benefits and privileges associated with them. These could range from rewards points to cash rebates to a host of deals, discounts and offers; try and get to understand how a credit card’s reward structure works. And, finally pay particular attention to caps, restrictions, tiers and limits on spending, on rewards and due dates.

4. Before you make a decision, compare – You can easily come up with a shortlist of several cards with very similar features, from different card issuers, that match your needs and spending habits. So, how then are you to differentiate between each of them? Simple.

Use the card comparison feature offered by many card issuers and if you want to compare cards of different banks, use third-party card comparison sites. These tools present you with a comprehensive list of features, benefits and charges / fees associated with each card in a side-by-side table form for easy comparison.

5. Promotions – To attract customers in the highly competitive credit card industry, card issuers usually come up with attractive promotions. Applying for a credit card during such a promotional period may yield you some additional benefits. Just make sure that you understand the terms and conditions fully before you sign on.

* Statistics courtesy: Bank Negara Malaysia.

How to Choose a Credit Card for your Business

How to Choose a Credit Card for your Business

As per statistics published by Bank Negara Malaysia, currently there are 23 banks and three non-banking financial institutions that are authorized to issue credit cards. And, many of these institutions issue business credit cards. Business credit cards are a great way for businesses including Small and Medium Enterprises (SMEs) to access credit for operational expenses, shore-up cash flows and help make purchases.

We will be presenting a few tips that will try to help you choose the right business credit card for your needs by highlighting certain important features that we feel should figure in your business card:

Greater credit limit

Your business credit card should provide you with a much greater credit limit, to help you meet your business expenses, than is available on a personal credit card.

The CitiBusiness Credit Card, from Citibank for example, provides you with a business-size credit limit (up to RM250,000) to cater to your growing business needs, an interest-free credit period for your business expenses and a credit line that is separate from any existing personal credit card limit held with the bank. With the Business Visa Platinum Credit Card from Standard Chartered Bank you can enjoy a credit limit of up to RM300,000 to fulfill your business requirements.

Better financial control

The business credit card of your choice should help you manage your finances by helping you exercise better control over your cash flows and expenses through a variety of measures including:

Keeping business and personal expenses separate. It helps promote better accountability and is useful for SMEs. And, if your business issues credit cards to employees, you should be able to control the spending on these cards.

The Maybank Visa Purchasing Card, for example, provides statements access to both card administrators and cardholders, can help set spending limits by department and employee, restrict card use to specific types of purchases, spending and even specific industry and also provides centralised local and global spending.

Inventory payments

Inventories constitute a critical component of your business. Your credit card should be able to help you in this much-needed area.

The Maybank Visa Purchasing Card, for instance, provides you with a 57-day interest-free period from the first transaction day. You can pay your suppliers immediately, get better negotiation leverage, reduce risk of overdue payments and improve cashflows. You can also take advantage of a streamlined procure-to-pay process and make use of tools that can accelerate the reconciliation process.

Travel expenses

Your growing business may necessitate significant amounts of business travel – meeting clients, vendors, suppliers, government authorities etc. Business credit cards can, and should, help you efficiently manage all your travel expenses while also helping you get more from what you spend.

The MAS American Express® Cards from Maybank is an example of a business card packed with travel-related benefits. This card represents a collaboration between American Express and Malaysia Airlines that provides you with superior Enrich Mile earn rate and an array of exclusive airlines benefits.

Reporting capabilities

Your business credit card should provide you with a wide range of reporting options, much more than a monthly statement of expenses that is available with normal credit cards. Reports could include quarterly reports and annual statements and a range of itemized reports, including reports by employee spend and by spend category.

The Citibank Citibusiness Credit Card, for example, offers comprehensive monthly-consolidated business statement reflecting the total spending by expense category, specific merchants and individual credit card member (owner and employee) activities.

Networking

Your business credit card should help you by providing you with opportunities for networking and meeting with peers, business facilitators and intermediaries. With the Business Visa Platinum Card from Standard Chartered Bank, for instance, you can gain access to a wide network of business events, seminars and programs to build connections.

What is Balance Transfer on Credit cards and How Should You Apply

What is Balance Transfer on Credit Cards and How Should You Apply

What is a balance transfer?

A balance transfer on a credit card happens when the outstanding balance on one credit card is transferred to another credit card, issued by a different bank (the customer should be the principal cardholder on both the credit cards).

The balance transfer process

Most banks in Malaysia have balance transfer programs to help them get more customers. You need to select and sign up for a balance transfer program with a bank different from the one which has issued your current credit card. Your outstanding balance will be transferred to your new credit card. And, you will get an interest-free / low-interest holiday ranging from 3 to 36 months.

To apply, you may need to fill up a balance transfer form, either after downloading it or online, and submit it along with required documents, including your last few credit card statements.

Benefits

▪ If you have an outstanding balance on a credit card that you are finding hard to meet, transferring the balance to another credit card will allow you to cut down on your interest payments. Banks generally charge pretty high rates of interest on balance rollovers. Balance transferring will get you a better interest rate; you will, hopefully, be able to take better charge of your finances.

▪ Diligently stick to the payments schedule post-the balance transfer and ensure your outstandings are paid in full and you could probably end up with an improvement in your credit scores.

Factors to consider

Tenor & Interest rate – Check out the interest rates applicable during and after the low-interest balance transfer period. It goes without saying that you should shop around for the best possible tenor and interest rates (zero interest) available.

Service Fees – There may be some upfront costs involved with your balance transfer. This may be in the form of service fees or processing fees and may be a percentage of the balance transfer amount. For instance, the Maybankard Balance Transfer Islamic Ikhwan Card from Maybank involves an upfront fee of 3%.

Credit limit offered – See if the credit limit offered by your new bank is sufficient to ensure complete transfer of the outstanding balance. If, for example, you can only do a part transfer of your outstanding balance, you will need to keep track of and manage payments for two cards. You could possibly end up with double the headache!

Shopaholic tendencies – A balance transfer program can contribute to get your finances back on track but only if you are able to control your swiping tendencies.

Some balance transfer programs in Malaysia

▪ The Maybankard Balance Transfer Program from Maybank offers you a repayment period of up to 36 months. Interest rates vary: 6% for 6 months, 9% for 9 months, 0% for 12 months, 4.5% for 24 months and 4.95% for 36 months.

▪ The Citibank Balance Transfer via Instalment Plan offers tenors of 6, 9, 12, 18, 24, 30 and 36 months with a flat interest rate of 5.32% to 5.81% pa which works out to an effective interest rate of 9.9% pa.

How Would You Identify the Best Cashback Credit Card in Malaysia

How Would You identify the Best Cashback Credit Card in Malaysia

Cashback credit cards return a percentage of your credit card spend in the form of cash. Here, we will look into the main factors to be taken into consideration before you zero in on a cashback credit card. We will also present a few popular cashback credit cards available here in Malaysia.

Spending requirements

Your cashback card may have minimum requirements in terms of total spend per month or billing cycle, the number of transactions and spend per transaction. Check whether these minimum requirements sync with your budget before you sign up for the card.

Limits

Cashback rewards are generally not unlimited. There may be caps placed on the amount of cashback you can earn per month or per year. Again, check these limits against your budget. If your budget overshoots these limits regularly you could decide to go in for another cashback card.

Categories

Quite often we see that cashback rewards may be limited to certain spend categories. Other categories may earn you lesser cashback or may be totally excluded from the cashback regime. Check the cashback earning categories with your top spend categories to see if this card is for you.

Other factors

▪ If you are going in for a card through a promotion it makes sense to pay particular attention to the terms and conditions that may apply during the promotional period and after.

▪ Cashback earnings may be related to spends only at certain outlets. Check the eligible outlets and the days of the week / times of the day when cashback can be earned. Sometimes, cashback can be earned only if your card is used at a merchant terminal that belongs to the card issuing bank.

▪ The process of redeeming cashback earnings

▪ Additional discounts / rewards points that can be earned

A few cashback credit cards examined

The Citi Cash Back Platinum Credit Card – This card provides a tiered cashback structure ranging from 0.3% to 5%. Monthly caps are applicable on petrol and grocery spends. No minimum spends are required and cash back earned is automatically credited back into the account. A complimentary insurance package and 24/7 personal concierge services are also available.

Standard Chartered Gold Cashback Mastercard – This card too provides a tiered cashback structure ranging from 2% to 5% linked to minimum monthly spend. Petrol and insurance payments are excluded from the cashback structure. Monthly cashback caps also apply.

RHB Travel Money Card – Earn cashback at any petrol station with cashback ranging from 2% to 5%. Cashback is tied to monthly retail spend and earnings caps are applicable. On top of the cashback, you can also earn reward points for your spending on dining, shopping and groceries. Points can be redeemed against Air Miles.

How Can You Protect Your Credit Card Against Misuse

How Can You Protect Your Credit Card Against Misuse

Consider these two pieces of statistics published by Bank Negara Malaysia:

▪ As on Nov 2014 there were more than 8 million credit cards in circulation and they accounted for 28.5 million transactions in November 2014 alone.

▪ As on September 2014 there were 17.2 million Internet banking subscribers and nearly 5.5 million mobile banking subscribers.

The first statistic attests to the popularity of credit cards while the second shows the popularity of Internet and Mobile banking. While there may not be exact figures it it reasonable to assume that the use of such a popular product like credit cards through online / mobile means has leapfrogged.

Both the popularity of credit cards and the rise of online / mobile ecommerce transactions has attracted fraudsters who try and exploit naive, unwary users and system vulnerabilities to make money. We’ve tried to put together a few simple measures to help credit card users guard against fraud / misuse both online and offline:

Measures against offline fraud

▪ As soon as you receive your card, sign on the signature panel on the back of the card.

▪ Keep your card details and PIN numbers confidential. Do not reveal these details to anyone, including those purporting to be from the bank, or on social/professional networking sites. Also, try not to write them down anywhere least you loose the info and compromise your security.

▪ Destroy and dispose of copies of receipts, airline tickets, travel itineraries or anything else that displays your card number in full.

▪ Check your cards wallet daily to make sure that none of your cards are missing.

Online security protection measures

▪ Keep your devices protected with the latest security updates and a strong anti-virus software.

▪ Shop online at reputable merchants and beware of authentic-looking websites.

▪ Use prepaid cards (they can be generated easily online for short-term, online use) for online shopping.

▪ Sign up for security verification systems like Verified by Visa or Mastercard SecureCode.

▪ Some banks provide extra layers of authentication in the form of security devices or personalized pictures during the login process. Use them, if available.

▪ Also, change your passwords/passcodes regularly.

Generally applicable security measures

▪ Keep regular tabs on your accounts. Most financial institutions now provide email and sms alerts, either free or at a nominal charge. Register for such alerts.

▪ Always keep your bank updated immediately in case of changes in personal information. This way you will be sure to receive information regarding suspicious activity on your account(s).

▪ Educate yourself in the ways of fraudsters and how they use emails, websites and phone calls to lure victims. Almost all the banks in Malaysia have sections on their website, and send regular updates, on how to securely transact online and identifying and responding to fraudulent approaches. In addition, the Bank of Negara and the Malaysian Cyber Security Agency also have informative sections on identifying and dealing with fraud. Take the time to read through them.

▪ If you become a victim of fraud, it is important that you report the incident immediately to your bank or contact the Malaysian Cyber Security Agency – http://www.cybersecurity.my/en/index.html

Tips While Using Your Credit Card For Shopping

One of the most popular uses of a credit card is for shopping or retail spends. Shopping can be a great joy especially when you throw caution to the winds and indulge to your heart’s content. But while the joy of shopping can tend to ephemeral dealing with the rather substantial hole in your pocket can be a continuing nightmare. Here we’ve tried to put together a few pointers to help you make the most of your credit card shopping sessions:

Analyze your spending patterns…

List all your monthly spending. As a first step try and categorize your spends under “essential” and “non-essential”. Its ok to have some non-essential spends; we’re human, after all. But if these spends seem to occupy a rather large portion of your budget, then its time you exercised a firm hand and reined them in.

Once this is under control, your next step would be to categorize your spends. Use categories like groceries, fuel, medical, public utility, apparel, travel, dining and entertainment etc. And finally use a few months data to identify those categories that consistently rank as your top spends.

Chose a credit card accordingly

There are various types of credit cards – petrol cards, travel cards, cashback cards, co-branded shopping cards, dining cards etc. Align your high-spend categories to the type of credit card you have in your wallet and you are well on your way to making the most of your credit card(s).

Don’t forget to check out the rewards on offer

Almost every credit card out there offers a host of rewards. Reward points, cashback, rebates, perks and privileges, complimentary offers etc. Its not just the issuing bank, card affiliates like Visa and Master are also doing their best with a host of offers, to pull you in! So, try and synchronize your high-spend categories to a card category to a highly “rewarding” card and you have an awesome threesome!

Using multiple cards

Kindly note: This is only for the advanced (read: disciplined) credit card user.

You’ve done the threesome-awesome, you settle your card bills in full, yet you feel that there is more to harvest. In that case, consider this: if you are maxing out on the rewards on your card but there is still some gas leftover in your high-spend categories then try going in for another same category-high rewards card, this time from another card issuer. You could possibly earn a little more from your unutilized high-category spends.

Tips while using your credit card for shopping

Things To Check For Secure Credit Card Use

Things To Check For Secure Credit Card Use

Credit cards have become an important means of payment for many users due to the convenience and benefits they give. However, ensuring safe and proper use of your credit cards is also important to prevent fraud and misuse. We’ve tried and listed out some safety measures for you to follow at various situations:

Receiving your card / PIN– Your new / replacement card should arrive in a sealed package; your credit card PIN will be sent to you in a sealed envelope at a date later than when you received your credit card. If the package / envelope is compromised, contact your card issuing bank immediately.

Transactional security – Here is a collection of tips to ensure your card’s security when you use it at a retail outlet:

▪ Make sure your credit card (not someone else’s) is returned to you promptly after you’ve paid for a purchase

▪ Check the sales slip to see if your name and card details are in order, sign it and retain your copy

▪ Sign up for SMS / email credit card transactional alerts

ATM transactions –

▪ Use ATMs at well-lit and well frequented spots

▪ Make sure that there are no suspicious devices attached to the ATM

▪ Check that there is no one observing when you enter your PIN and

▪ Retain your card after use

Online shopping –

▪ Shop only at trusted merchants

▪ Sign up for the free Verified by Visa or MasterCard SecureCode for additional protection

▪ Use prepaid cards

Device security –

▪ Ensure your computer / mobile are protected by strong passwords

▪ Be aware of and in control of how your computer / browser / mobile app stores, retains and uses information

▪ Be cautious while responding to genuine looking links / emails / SMS

▪ Download banking apps only from the location prescribed by your bank

Loss/theft of credit cards – Promptly report loss or theft of your credit card to the card issuer and follow their instructions.

Credit card statements – Upon receiving your card statement, check your sales slips against the transactions listed on the statement and report any discrepancies immediately to your card issuer.

Identity theft – Identity thieves steal your identity and impersonate you to gain access to your account. Here are some ways in which you can protect your identity:

▪ Sign your card immediately upon receipt

▪ Do not disclose PINs or passwords and change them regularly

▪ Do not share your personal / card information with anyone unless for legitimate purposes and to a legitimate person

▪ Safely and effectively dispose of any documents containing your personal / card information

▪ Keep yourself updated about devices and techniques used by fraudsters and stay alert