3-Step Method When Choosing Credit Card

Last week we spoke about whether you should be using credit cards. Let’s assume that yes, you are disciplined and can use them. So which credit card would be best?

I have a simple three-step method that I personally use when selecting my credit card.

Step 1, convenience. As discussed last week, the best mindset to have when using credit cards is to think of them as mediums of spending money that you already have. The cards are just for convenience. With this same philosophy, I like to pick credit cards from banks where I am already using their services. Having your credit card be from your main bank just integrates everything together and makes things easier. It makes card applications easier, monitoring of spending easier, and most of the time makes paying your bill easier as well.

Why not go for the card with the best rewards, you say? Well, the rewards from credit cards are not very significant in the first place. They’re little bonuses to add on to your spending which can be nice, but not spending in the first place will always be better for your finances.

That said, this brings us to Step 2, rewards that fit your spending. I’m going to say that again, “rewards that fit your spending”. Not the other way around. You should be choosing cards that fit what you already do, rather than adjusting your spending to fit the card. For example, if you’re a frequent flyer, be it for business or holiday, then a card with a good air miles conversion may be good. If however you mostly spend on petrol, then one of the petrol cards would be better.

Step 3, fees. Some credit cards have an annual fee, some are free for a fixed number of years, and some are free for life. I personally never want to feel obligated to spend on any particular card, so I prefer those that are either free or those that will waive the fee with a certain annual spending. Note however that the waiver upon minimum spending can be dangerous, since you might be encouraged to spend more. Another thing to realise is that each credit card will incur an annual RM25 government tax, so having many different credit cards that you rarely use is not recommended!

Finally, some bonus tips: Cashback or cash rebate is usually a less efficient reward per RM spent compared to points. However if you never use the points or aren’t able to spend them at the right shops, then a pure cash rebate is still better than nothing.

For Maybank customers, Maybank’s uniqueness is their American Express card. The Amex card gives more points per RM spent and some of them have better conversion rates for air miles. The downside is that you will have to get used to asking “Do you accept Amex?” before paying, as a lot of merchants do not take Amex. If you do get an Amex card, I recommend either the 2 Gold Cards or 2 Platinum Cards set as you would then have a second Visa/Mastercard to use when Amex is not accepted (but be aware that you will incur 2x RM25 govt tax). The Maybank Premier 2 Cards also has one of the best air miles conversion rates, but requires a high annual expenditure to maintain (or pay RM800 annual fee).

For CIMB customers, their points to RM conversion rate is supposed to be the best among the consumer banks. One highlight is the CIMB e Card which gives 12x bonus points for expenditure on the 28th of each month. This may be useful for those that pay their bills altogether at the end of the month; you’d just need to coordinate it all to be on the 28th. Another set of cards of note at CIMB are their Petronas cards, which give better cashback rates if you use Petronas for your petrol or EV charging needs.