A credit card can be a friend or a foe to your finances — depending on how you manage your spending. For a fresh graduate who just joined the workforce, this can be a powerful tool to better manage your cash flow.
Fresh graduates in Malaysia earn an average starting salary of RM2,500, which means the bulk of the country’s young workers are eligible for credit cards.
The good news is, they can get credit cards to work to their advantage by leveraging on the various features and benefits offered by credit card companies. They include cash backs, reward points and discounts with selected merchants.
However, as those earning RM36,000 per annum and less can only hold credit cards from a maximum of two issuers, so you need to pick the right ones.
Owning a credit card gives you better spending power, but also comes with a bigger responsibility. Here are some key factors that a fresh graduate should look into when choosing their first credit card and three of the best entry level cards in Malaysia.
1. Check the merchants
One of the best things about using a credit card are the discount and privileges you get when you spend at the card’s selected merchants.
You’ll be surprised at how much you can actually save if you use a card that offers great discounts for things that you regularly spend on.
Is it entertainment, petrol or online shopping? Once you know the answer to that, then it’s much easier to find a credit card to suit your lifestyle.
Pro tip: Don’t be distracted by the attractive sign-up offers!
2. Annual fee waiver
Some credit cards charge an annual fee. When they do this, they get the money upfront even before consumers start using their credit card. Remember this fee is separate from the government service tax of RM25.
However, plenty of credit cards don’t charge one and in truth, consumers do not get anything in return whether they pay it or not.
Pro-tip: Don’t be afraid to negotiate for a fee waiver!
Most banks will likely give you a fee waiver or some substantial incentives to keep your card open. This is because credit cards are extremely profitable for banks and doing away with the extra expenses will attract more customers to sign up.
3. Get rewarded for your spending
Many credit card companies offer incentive programmes, which include cashbacks, reward points and air miles for customers to spend more.
Whether you are a gadget geek, movie buff or a fashionista, when shopping for credit cards, always pick one that best complements your spending habits.
Be sure to check out the cards cashback benefits and and categories for cashback. This allows you to maximise your cashback benefits according to your lifestyle, which means you actually get rewarded while doing the activities you love best.
Pro tip: Cashbacks are great, but they can tempt consumers to overspend. Always try to clear your credit card bill to avoid interest charges, because your cashbacks would mean nothing if you end up paying for interest on your balance.
Many credit cards nowadays are targeted at fresh graduates and it allows a person to build his or her credit history. Use it wisely to maximise the benefits that they offer.
The catch is of course to never go overboard with your credit card. Managing your money well is key to a sound financial future.