Shiny and Powerful: 5 things you need to know about Credit Cards

It’s not unusual for a person nowadays to have a credit card. In fact, you might have one right now. And you’d be surprised or not to find out that some have 2 or 3 more credit cards. Is it reasonable to have that many credit cards? Won’t that say something bad about me and my spending habits? Do I need to get another credit card?

Shiny and Powerful: 5 things you need to know about Credit Cards by CF Lieu - Certified Financial Planner Malaysia

The questions above are just a few that you’d want to ask. You may feel intimidated, and you may feel differently when it comes to credit cards. As shiny and powerful as they may,
credit cards are more than that and can be of great help to you. Here are five things you need to know about credit cards.

You need a credit card

Getting a credit card can have a lot of benefits. For one, a credit card provides a fast and reliable way to purchase any stuff you need or want without using cash. Credit cards are
also status symbols that signify that you’re financially stable.

If you apply for loans, you might’ve heard of credit scores. Credit scores are what lenders look at if they’ll approve your loan application or not. Believe it or not, the
more credit cards you have, the better it can help you look good, especially if you’re responsible for paying your debts on time. A credit score of 670 and above is suitable for a lot of lenders.

It’s not wrong to have a lot of credit cards

A lot of people say that owning a lot of credit cards doesn’t do any good as you’ll only get into more debt. However, some people swear that having a lot of credit cards
helps them with their purchases. Some even have 20, 30, or even more credit cards with them.

The recommended number, however, is to keep 2-3 credit cards with you. It’s also advisable to have different credit cards. For example, don’t carry three master cards around.
The ideal is to have a credit card for each of the big four: one Mastercard, one Visa, one American Express, and one Discover.

The reason for keeping one of each is that some stores only accept one of the other. An example of this is Costco. In the past, Costco accepts all major credit cards. Since their partnership
with Visa, they only accept Credit cards from Visa. Again, it’s not wrong to keep a lot of credit cards. Cards don’t bury you in debt; it’s your spending habits that you should take care of.

Credit Cards have limits, and you can set them

Most people don’t know about credit card limits and ultimately give in to impulsive buying. This uncontrolled spending is what buries people in so much debt. The good thing about
credit cards is that you can set the limits on each of them. Setting a limit to your cards can help you once have that irresponsible urge to buy something.

If you’re over the limit of your credit card, you can still use it, provided that you need to pay the penalty. You should always think carefully before paying that penalty as some
credit card companies and banks charge excessively high rates. For security reasons, some stores may not allow a purchase done through a credit card that’s over the limit.

Secured and Unsecured Credit Cards

There are two types of credit cards that you should know about: Secured and Unsecured Credit Cards. A deposit backs a secured credit card. Secured Cards also have a limit equivalent
to that primary deposit. If this is your first time applying for a credit card, then most likely it’s a secured one. Most card issuers consider the cash deposit as collateral in case of non-payment.

Unsecured credit cards don’t require a cash deposit and come with more risks to the issuer. This is the reason why some issuers look at your credit score before issuing you with
an unsecured credit card.

A credit limit with an unsecured card will depend on your income and credit history. You should always know the specific financial terms so you won’t get confused. You can ask a financial expert for more help with this.

Some Cards have Signing Bonuses

Another reason why people get credit cards is for sign-up bonuses. You get the rewards when you pay your dues diligently. Here’s an example:

You apply for a credit card with a signing bonus of 3000 points for a $1000 accumulated spending. You pay your dues and then get the 3000 points. You then check a rewards list detailing
what those 3000 points can give you. Mostly, those points can be a free movie, free food, travel perks, discounts on your next purchase, etc.

There are also other ways of getting your bonuses. Loyalty schemes which require you to buy a lot from a specific store are one of those ways. Be aware though, a lot of people often
get a lot of credit cards for the signing bonus. A signing bonus can only be acquired through specific requirements, such as paying on time.


Getting a credit card allows you to buy goods without having to use cash. Compared to actual money, credit cards have a lot of security features such as having a limit, personal authorizations,
etc. When you lose a credit card, you can go the issuer to block off your card.

Credit cards can give you a whole new experience of purchasing and can even help you with your credit scores. Indeed a credit card is a good thing to have with you. Always remember that the old movie line before you use your credit card: “With great power, comes with great responsibility.”

If you are new in Malaysia, our financial tips for expats will go a long way making your settlement decisions.

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