Things To Consider When Choosing A Credit Card
Generally speaking, credit card customers now have the luxury of choosing a credit card out of the many different types of credit cards available in the market. Financial institutions are becoming more aggresive in their approach to capture the credit card market and this is largely attributed to the high earnings for these financial institutions through commissions paid by merchants and high interest rates charged to credit card holders when the full outstanding sum is not paid by date due. It is therefore not surprising that these financial institutions even issue different types of credit cards to attract different segments of the market. So, how should one go about choosing the best credit card to apply for? What are the things you should consider when choosing a credit card?
Annual Fees
First and foremost, find out whether any annual fees are payable. Some credit card issuers waive annual fees totally with no terms attached (one of which is Direct Access under CIMB Bank). Some waive the annual fee for the 1st or first couple of years. Some would waive the annual fee subject to your amount charged per month or year. Some would waive the annual fee subject to the usage of the card for a stipulated number of times. In my opinion, annual fees are archaic and should be done away with - especially with such stiff competition between the financial institutions. Anyway, even if your credit card comes with an annual fee, it does not prevent you from requesting for a waiver when the annual fee is due provided you are a good paymaster.
Incentives for New Card Holder
Freebies? Some will entice the new credit card holder with gifts, free hotel stays and so on. However, do make it a point to find out whether there are hidden terms related to the free gifts. Some will require you to spend a minimum amount of money or transaction before you qualify for the gift. Sometimes you will discover that to utilise the free gift, you will have to “top up” by paying for other incidentals. In such cases, it is obvious that it not really free. Do read the fine prints. Financial institutions are rarely likely to be generous 
Rewards
What are the rewards for using that credit card? Does it accumulate rewards points for purchases or offer cash rebates? Study these rewards carefully and if the former is involved, ask for a copy of their rewards catalog to see how easy or difficult it is to accumulate enough points to make a redemption. Some rewards points expire and some don’t. Quite obviously the latter is preferable. Read the fine prints on cash rebates and whether the percentage of cash rebates depend on a minimum outstanding sum carried forward each month. Check where can you accumulate cash rebates - is it at selected merchants or across all purchases.
Interest Rates
In Malaysia, the interest rate chargeable on outstanding sum unpaid is 18% per annum (or 1.5% per annum). In other countries, it may be variable and subject to market competition. Check for the best interest rates available. All else being equal, you will surely want to find the credit card that offers the lowest interest rates on outstanding sum. Some student credit card have special rates, obviously to attract this segment of the market.
Balance Transfer
Balance transfer may offer some breathing space for a credit card holder who is finding difficulty coping with an existing credit card debt. With proper management, balance transfer to a new credit card can help to reduce the interest charges. Do find out the charges involved for balance transfers as most financial institutions will impose a one-off transfer fee. It is rare for them not to impose any fee or charges for a balance transfer. Work your maths to see if the transfer charges payable outweigh the interest charges payable at the current credit card which is in debt.
Reputation
Personally, I would choose a financial institution which is of good repute for my credit cards. During the economic crisis in the late 90s, there were rumours that some credit cards issued by some Malaysian banks were not accepted for payment in other countries whereas well-known foreign banks had no problem having their credit cards accepted for payment. Ask around for people’s feedback on customer service departments of these financial institutions on credit card matters.
Fine Print
I can’t overemphasise the importance of going through the application form with a fine toothcomb to read the fine print. Whilst the goodies (such as rewards, annual fee waiver, etc) are printed in bold, the intricacies of how these goodies come to you may have certain terms attached. Read and understand what you are applying for. You only have yourself to blame if you don’t do so.
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