12 Best Credit Cards For Fresh Grads To Build Credit Score In Malaysia

Congratulations! You’re fresh out of university and ready to jump into the next phase of your life.

This phase will see you encountering a whole host of obstacles, from finding your first job and paying your taxes, to building your credit score and eventually – buying your first home.

Getting your first credit card (and using it wisely!) is often the first step to building up a good credit score. But with the average fresh graduate salary in Malaysia around just RM2,500 to RM3,500, which credit card can you apply for?

To help you identify the right credit card for your needs, let’s start with the basics first.

What Is A Credit Card, And How Does It Work?

A debit card deducts money directly from existing funds in your bank account. This means that if your bank account only holds RM1,000, you can only spend RM1,000.

A credit card on the other hand, allows you to pay with borrowed money from the bank up to a certain limit. Even if your bank account only holds RM1,000, you can still spend RM1,500. The bank then sends you a bill every month for the money you’ve borrowed.

While you don’t have to repay the entire outstanding balance immediately, there is a minimum monthly payment of typically 5%. If you fail to make this minimum monthly payment, you’ll incur a late payment charge.

Meanwhile, your outstanding balance will also incur finance charges of around 15% to 18% per annum, compounded daily.

Credit cards aren’t free either. They come with an annual fee, which ranges between free for life up to a few hundred ringgit per annum.

Many credit cards will also offer a waiver criteria. For instance, the annual fee will be waived for the first three years, or if the cardholder spends a certain amount in a year.

But don’t let those figures frighten you! While the finance charges are pretty steep, credit cards can be incredibly useful tools to help you prove your creditworthiness.

Plus, you get to accumulate reward points, redeem freebies, discounts, enjoy benefits like free air miles, and best of all – get sweet, sweet cashback!

3 Steps To Apply For A Credit Card In Malaysia

Step 1: Check your credit score

Conducting a preliminary check on your credit score can help determine if your application will be approved or denied.

This can be checked via CTOS or CCRIS. Keep in mind that as a fresh grad with no prior credit history, you might not have a credit score yet. Read more: 5 Tactics To Enhance Your Credit Score.

Step 2: Decide how you want to apply

There are several ways you can go about applying for a credit card in Malaysia. These include:

a. Online application from the bank’s website

If you already have a specific card in mind, you can skip the queue and apply online.

b. Over the counter

Head to your nearest branch if you need more face-to-face guidance on which card would be best for you.

c. Credit card agents

Credit card agents can often be found in shopping mall roadshows. They typically offer attractive free gifts if you sign up on the spot.

Step 3: Sit tight and wait for your credit card to arrive!

Depending on how you apply, you will either receive your credit card through mail, or collect it at your nearest branch.

What Documents Do I Need For My Credit Card Application?

To apply for a credit card in Malaysia, you need to fulfill a few eligibility requirements as laid out in Bank Negara Malaysia’s Credit Card Guidelines

• Minimum age of 21 years old and above

• Minimum income of RM24,000 (or RM2,000 a month)

However, do note that some banks have different guidelines. HSBC Bank for example, has a baseline requirement of RM36,000 (or RM3,000 per month).

You will also need to prepare certain supporting documents to the bank to qualify for the credit card you’re applying for. The necessary documents will depend on whether you’re an employee, government servant, or self-employed.

In general, fresh grads will need to present the following documents to apply for a credit card.

*Check with your bank first, as not all banks will require the same documents.

Employees: 5 Documents Required For Credit Card Application

1. Photocopy of NRIC (front and back)

2. Latest EPF statement AND/OR;

3. Latest salary slip(s) AND/OR;

4. Latest EA form AND/OR;

5. Latest 3 months’ bank statements

Self-Employed: 3 Documents Required For Credit Card Application

1. Photocopy of NRIC (front and back)

2. Form B with tax receipt

3. Photocopy of business registration forms

12 Of The Best Credit Cards In Malaysia For Fresh Grads

So many credit cards, where to begin? We’ve compiled the best credit cards for fresh grads in Malaysia with a minimum annual income requirement from RM24,000.

While all of these cards offer attractive cashback and rewards, do not be misled by the cashback percentage rate. Keep in mind other factors such as:

• The eligible spending categories

• Cashback cap per category

• Total cashback cap

• Minimum and maximum spend eligible for cashback

• Eligible cashback days

For instance, if a card offers 8% cashback on groceries and retail shopping, but only 0.5% cashback on weekdays – it might be difficult for you to achieve optimal cashback if you work on weekends.

Realistically consider your current lifestyle, and remember not to increase your personal spending for the sake of achieving the minimum spending required for cashback.

*information compiled as of 17th March 2022.

Why Does Your Credit Score Matter When It Comes To Applying For A Home Loan?

When it comes to getting your first home, many Malaysians worry about the hefty downpayment and bringing home a high monthly income.

But for 54% of Malaysians, poor credit history is the main barrier preventing them from getting their home loan approval. Read more: 5 Ways to Improve Your Credit Report.

Your creditworthiness plays a major role in determining how much loan you can get, and even the interest rate banks will offer you.

When screening applicants for home loan approval, lenders look for a disciplined borrower. As a fresh grad with no credit score or history whatsoever – lenders won’t know if you’ll be a good paymaster or not.

Using your credit card wisely (paying the full amount on time, every time to avoid accruing finance charges) will help you make that first step in building a good credit score, and set yourself up for success when it comes time to buy your first home!

Relevant Guides:

• Malaysians Share The Surprising Reasons Why Their Home Loans Were Rejected

• Why Your CCRIS And CTOS Reports Matter!

• Here Are Some Of The Trends You Should Give Up To Afford A Down Payment!