When Not To Use Your Credit Card

A credit card can seem like a convenient way to pay for a car deposit, a hospital bill or a wedding when you don't have enough cash on hand. But if you can't repay the full balance by the due date, your bank can charge up to 18% p.a. interest on the outstanding amount. For these and a few other costs, you can pay less.

Car Deposits

Paying a car deposit with a credit card leaves you with two debts, the card balance and the hire purchase loan for the rest. Bank Negara Malaysia's (BNM) Hire Purchase Consumer Guide tells buyers to have the upfront 10% down payment ready, which is RM6,000 on an RM60,000 new car. Used cars can need more, depending on the bank and the car's age. Public Bank, for example, finances up to 90% of a passenger car up to 10 years old but only 75% of one aged 10 to 12 years, so the deposit rises to 25%. Compare used car loans across banks. To see how banks decide what you can borrow before you visit a dealer, read RinggitPlus's article on getting pre-approved for a car loan.

New hire purchase agreements are quoted as an effective interest rate (EIR), the yearly rate on what you still owe. Banks must switch by 31 December 2026 and other lenders by 31 March 2027. Our guide on what to check before you sign a car loan explains how this differs from a flat rate.

Ask the dealer or bank for the EIR. When you compare car loan offers, compare EIR, not flat rates. The rates on RinggitPlus's comparison pages are the ones banks supply, and some are still quoted the old flat way, so check with the bank.

If you can't pay the deposit, Bank Islam's Vehicle Financing-i GradONE finances up to 100% of the on-the-road price. It's for graduates aged 20 to 30 with at least a diploma who work for approved employers. To compare graduate car loans from other banks, see our graduate car loan page. If you don't qualify for a scheme like that, save for the deposit before you commit to the car.

Hospital Bills

If you pay a hospital bill with a credit card and can't pay the full amount before your statement due date, interest is added to the bill you already owe.

Before you put a medical bill on your card, check whether either of these applies to you.

You Have EPF Savings

Since 11 May 2024, EPF members below 55 have three accounts. Akaun Fleksibel lets you withdraw at any time, for any reason, with a minimum of RM50. You can apply through the KWSP i-Akaun app or web portal. Akaun Fleksibel receives 10% of each contribution. It started at zero unless you moved some savings into it in 2024, so check the balance first.

Akaun Sejahtera allows withdrawals for approved critical illnesses, medical equipment, and fertility treatments. You can withdraw for your own treatment and for your spouse, children (including adopted children and stepchildren), parents (including parents-in-law), and biological brothers and sisters. The fertility withdrawal covers only you and your spouse. Not every condition qualifies, so check EPF's list of approved illnesses before you assume yours does.

You Have A Medical Card

If you're admitted to a panel hospital (one that has agreed to bill your insurer directly), the insurer pays the hospital, up to your plan's limit. You may still pay part of the bill. Your medical card plan may make you pay at least the first RM500 of the bill, or at least 5% of it, under BNM's rules for new plans. Before you're admitted, check your policy and ask your insurer for a guarantee letter (a written promise to pay the hospital), so you know how claims work before the bill arrives.

A Month's Home Loan Instalment

If you can't pay your full home loan instalment, call your bank first. Ask about a hardship or repayment assistance arrangement. RinggitPlus's guide on what R&R, SLO, and other loan restructuring terms mean explains how these arrangements affect your repayments and your CCRIS record (BNM's record of your loans).

Akaun Fleksibel can cover the instalment. If the instalment is too high for the long term, Akaun Sejahtera allows a withdrawal to reduce your outstanding home loan balance. It applies to your first or second house. You need at least RM500 in Akaun Sejahtera, and you can withdraw once a year.

EPF pays the money straight into your loan account only if the loan is with an EPF panel bank and isn't a non-performing loan. A non-performing loan is one with seriously overdue payments. If you're already behind, check with your bank before you apply. You can apply through the i-Akaun app, and EPF's housing loan withdrawal page lists the full conditions. Ask your bank what the withdrawal does to your instalment.

A loan that's already non-performing can still use the Housing Loan Monthly Instalment Withdrawal. It pays your monthly instalment from Akaun Sejahtera, at a minimum of RM100 a month for at least six months. You need at least RM600 in Akaun Sejahtera and must be below 55. EPF pays a non-performing loan by banker's cheque directly to the lender.

A cash advance means using your credit card to withdraw cash or to transfer money to your bank account. It costs RM80 on an RM2,000 instalment if you repay it the next month. Banks set their own fees. Maybank's, for example, is 2.52% of the amount withdrawn, with a minimum of RM11.65, so the fee on RM2,000 is RM50.40. Interest starts on the day of the transaction, with no interest-free period. At 18% p.a., it adds RM29.59 for 30 days. If you can't repay it the next month, or you need it again, the interest keeps building while your home loan stays unpaid.

A cash instalment plan is another way to get cash from your card limit, and you repay it in monthly instalments.Maybank's EzyCash, for example, has a 6-month plan at 0% interest with a one-time fee of 3.88% of the amount, and longer plans at 8.88% p.a. with an RM100 fee. Both fees carry 8% service tax, and the minimum is RM2,000. At RM2,000, the 6-month fee is RM77.60 plus RM6.21 service tax, RM83.81 in total. That's RM3.81 more than one month of cash advance, but you repay it over six months.

Skipping the payment leaves a missed payment on your CCRIS record for 12 months. Banks check that record when you apply for a new loan, so it can make it harder to refinance or borrow again later.

If you want to explore refinancing, compare home loan rates across banks and use the home loan calculator to check the instalment before you approach your bank.

Weddings

On a credit card, an RM20,000 wedding bill left unpaid at 18% p.a. costs RM3,600 in interest over one year, in addition to the RM20,000 you owe. If the balance stays at RM20,000 for three years, the interest comes to RM10,800.

BNM's Personal Financing Policy Document bans banks from offering personal loans priced on a flat rate from 1 January 2027. Until then, banks can still quote a flat rate, so compare the EIR.

A 4% flat rate on an RM20,000 personal loan over five years works out to 7.42% EIR. On the card, the interest alone is RM300 a month and the RM20,000 doesn't go down. On the loan, you pay RM400 a month and the whole RM20,000 is repaid in five years. Check a few banks before you apply, and read Understanding Personal Loans to decide whether one fits your situation.

For honeymoon flights and hotels, a card can earn rewards if you pay the full balance. Some travel cards pay bonus points on airline tickets and overseas hotel stays.

Business Costs

Using a personal credit card to fund a business is risky because business income, especially in the first months, is unpredictable. If revenue comes in slower than expected, the card balance stays unpaid and keeps charging interest.

A business loan gives you a lump sum (one large payment) and a fixed monthly repayment that ends on a set date. Compare business loans by their EIR. If you can't get a business loan yet, a personal loan is the next option to look at. A personal loan is in your own name and appears on your own CCRIS record, so if the business can't pay, the missed payments go on your record. Banks set their own requirements based on your debt service ratio (DSR). Use the DSR calculator, which asks for your pay before deductions, to check what you qualify for before you apply.

Fuel and supplier payments are reasonable card uses if you can pay them in full by the end of the billing cycle (the period between two card statements). They also earn rewards.

Shops That Charge Extra For Cards

Some merchants add a surcharge (an extra fee) when you pay by card, or set a minimum spend for card payments. They do this to recover the fee their bank charges on each card payment.

BNM's Payment Cards Framework says card network rules don't let a shop add a surcharge or set a minimum spend, unless the shop has been exempted. An exempted shop must tell you at the shop and tell you how to complain.

If a shop charges you extra, complain to your card issuer or to the acquiring bank, the bank that supplied the shop's card machine. The acquiring bank's name is on the top part of the receipt or on the card machine, according to Bank Rakyat's guidance, so keep the receipt as evidence. BNM won't accept a complaint that your bank's complaints unit hasn't seen first, so complain to the bank before you contact BNMLINK, BNM's contact centre. To reach BNMLINK, use its complaints page or call 1-300-88-5465. If your card issuer doesn't fix the problem, the guide on how to escalate a complaint against your bank explains the next steps.

E-Wallet Top-Ups

E-wallets such as Touch 'n Go eWallet,GrabPay,Boost, andMAE are useful for paying small traders who don't have card machines.

If your card gives cashback or rewards on e-wallet top-ups, you earn rewards on that top-up, even though you pay the shop with the e-wallet. First, check whether your card rewards top-ups. Some do, some don't, and some reward them only above a monthly spend or up to a monthly cap. Two examples:

• The UOB EVOL Card pays 5% cashback on e-wallet top-ups, up to RM15 a month, but only if you spend at least RM1,000 on the card that month. Spend less and the top-ups earn nothing.
• The HSBC Amanah MPower Platinum Credit Card-i gives up to 8% cashback on top-ups to GrabPay, Touch 'n Go and FavePay if you spend at least RM2,000 a month. The bonus part of the 8% is capped at RM15 a month for e-wallet top-ups, and petrol and groceries each have their own RM15 cap.

If your card doesn't reward top-ups, paying by card directly, wherever it's accepted, earns you more.

Frequently Asked Questions

What happens if I miss my credit card minimum payment?

BNM's Credit Card and Credit Card-i Policy Document says banks must give you at least four extra calendar days after the due date. After that, the bank can charge a late payment charge of 1% of your outstanding balance, or RM100, whichever is lower. If a bank sets a minimum late payment charge, the minimum can't be more than RM10. The bank also can't charge interest on the late payment charge itself. The 20-day interest-free period (counted from the statement date) is guaranteed only when last month's balance was paid in full. Once you carry a balance, your bank can charge interest on new purchases straight away. Banks also put cardholders into three groups by how on time they pay the minimum, with maximum interest rates of 15%, 17%, and 18% p.a. A missed payment can move you to a higher rate. It also appears in your CCRIS record.

Can I withdraw EPF to pay for a family member's medical bills?

Yes. EPF's health withdrawal covers your own treatment and the treatment of your spouse, children, parents, and biological brothers and sisters. You must be below 55 and have savings in Akaun Sejahtera. The illness or medical equipment must be on EPF's approved list. If your employer or the patient's employer pays part of the bill, you can only withdraw the part that wasn't paid. You can withdraw the actual medical cost or all of your Akaun Sejahtera savings, whichever is lower. EPF pays you if you've already paid the bill. If the bill isn't paid yet, EPF pays the hospital directly.

You'll need:

• your MyKad
• your bank account details
• a medical report from the hospital, dated within one year of your application
• the medical bills and receipts
• an employer's letter, if you or the patient is employed
• proof of relationship, if you're applying for someone else

You can apply at your nearest EPF office or by mail. EPF's health withdrawal page lists the forms and documents you need. An authorised person must certify your document copies with their name, designation and official stamp. Some copies must be certified by an EPF officer instead. EPF pays directly into your account only if your bank is an EPF panel bank and your identification number matches your bank's records. If the payment to your account fails, EPF sends a banker's cheque.

How long does it take to pay off a credit card if I only pay the minimum?

BNM's own example in its Credit Card Policy Document assumes 18% p.a., no new spending, and a minimum payment of 5% of the balance or RM50, whichever is higher. On an RM3,000 balance, paying only the minimum takes 4 years and 7 months and costs RM1,055 in interest. Paying a fixed RM250 every month clears the same balance in 1 year and 2 months, with RM333 in interest. On an RM10,000 balance, paying only the minimum takes 7 years and 4 months, against 1 year and 8 months if you pay RM600 a month. If you already have an unpaid balance, read the guide on what to check before applying for a balance transfer. The debt consolidation calculator estimates what a debt consolidation loan could save you.

When Interest Costs More Than Your Cashback

A card that gives 5% cashback earns RM50 on RM1,000 of spending. If you leave that RM1,000 unpaid after the due date, interest at 18% p.a. costs RM15 a month. In just over three months, the interest costs as much as the cashback. If you want a card that fits how you spend, compare cashback credit cards or petrol credit cards.