In Malaysia, having a credit card or a debit card is one of the most convenient things any Malaysian could do to simplify their daily life. With the high penetration level of online banking systems and services, people could speed up the small trivial time of cash payment. Then they could set up a flexible payment for credit cards in Malaysia banks at the end of every month when their salaries are input into the bank account. This could also work for debit cards, freeing people up for more time to spend on other important things. If you are not sure what to choose, a credit card or a debit card, read this. 

What is a credit card?

This card is granted by a financial institution, in this case, banks that allow people to borrow funds/money from the financial institution. Cardholders then pay back the borrowed money with an interest rate based on the institution’s terms. There are several types of credit cards: 

• Standard cards simply extend a line of credit to their holders for making purchases, balance transfers, and/or cash advances, and they usually come without any annual fee.
• Premium cards are those that offer perks such as concierge services, airport lounge access, special event access, and more, but they usually have higher annual fees. This is the popular choice for most of the high-earned people according to its entrance fee. 
• Rewards cards will offer cash back, travel points, or other benefits to customers depending on how they spend the borrowed money. This will be based on your credit history, make sure you have or build a good one. 
• Balance transfer cards have low introductory interest rates and fees on balance transfers from another credit card.
• Secured credit cards require an initial cash deposit that is held by the issuer as collateral.
• Charge cards have no preset spending limit but often don’t allow unpaid balances to carry over from month to month. 

Perks of having a credit card

Build credit history: your credit card usage history will be recorded into a credit report which includes both positive (on-time payments, low credit utilisation ratios) and negative (at payments, delinquencies) events. Making up your credit scores poses a profound effect on the future interest rates for loans, or other banking services. 

Warranty and Purchase Protection: finance institutions will often provide warranties or insurance for purchased items that go beyond those that the retailer or brand is offering. For instance, if an item bought with a credit card falls apart or becomes defective after the manufacturer’s warranty has expired, it is worth checking with the credit card company to see if it will provide coverage. Or you may have purchase and price protection built-in to help you either replace items that are stolen or lost, or even claim a refund price difference when the item that you purchased is sold elsewhere for less.

What is a debit card?

Unlike credit cards in borrowing money from banks, Debit Cards deduct straight from the money within your bank account. Debit cards offer the convenience of a credit card with similarities in consumer protection, especially when issued by major payment processors like Visa or Mastercard. There are 3 types of debit cards with one standard and the other two that will not require the customer to have a checking or savings account:

• Standard debit cards that draw on your bank account.
• Electronic benefits transfer (EBT) cards are issued by state and federal agencies to allow qualifying users to use their benefits to make purchases.
• Prepaid debit cards give people without access to a bank account a way to make electronic purchases up to the amount that was preloaded onto the card.

Perks of having a debit card

Avoid debt: due to the debit card nature of deducting the already-have money from cardholders’ bank accounts. People will be less likely to overspend and eliminate the danger of building up debts. 

Fraud protection: With most major service providers like Visa or Mastercard provide more protection. As long as the user reports fraud or theft as soon as they realise it has occurred, the banks and service providers will be able to support you. Lateness in reporting will result in you being held responsible for some or all losses if any unauthorised purchases are made through your debit card without your consent. 

No annual fee: Though many credit cards charge an annual fee, debit cards don’t. There’s also no fee for withdrawing cash using your debit card at your bank’s ATM. However, you may pay other fees to maintain your checking account.