Personal Loan vs. Credit Card: Which is Better in Malaysia (2025)?
When it comes to financing, Malaysians often face a choice between personal loans and credit cards. Both options have their advantages and disadvantages, depending on your financial needs, repayment ability, and long-term goals. In this guide, we’ll compare personal loans vs. credit cards in Malaysia for 2025, helping you determine which option is best for your situation.
🔍 1. Overview: Personal Loan vs. Credit Card
| Feature | Personal Loan | Credit Card |
|---|---|---|
| Purpose | Lump sum for large expenses | Flexible spending for daily use |
| Repayment | Fixed monthly installments | Minimum monthly payment or full balance |
| Interest Rate | 3% – 15% p.a. | 15% – 18% p.a. |
| Loan Amount | RM1,000 – RM500,000 | Credit limit based on income & credit score |
| Tenure | 1 – 10 years | No fixed tenure |
| Approval Time | 1 – 5 days (banks), 24 hours (fintech) | Instant to 2 days |
| Eligibility | Minimum RM2,000 – RM3,000 monthly income | Minimum RM2,000 monthly income |
| Collateral Needed? | No (usually unsecured) | No |
| Best for | Large one-time purchases (e.g., home renovation, medical bills) | Small recurring expenses (e.g., shopping, dining, travel) |
📌 Key takeaway: Personal loans are better for large, one-time expenses, while credit cards are more suitable for small, frequent expenses.
🔹 2. When to Choose a Personal Loan
✅ Best for:
✔ Large expenses: home renovation, wedding, medical emergencies, education
✔ Debt consolidation: paying off multiple high-interest debts
✔ Business startup or expansion
Pros of Personal Loans
✅ Lower interest rates than credit cards (as low as 3% p.a. for banks, 10%-15% p.a. for licensed lenders)
✅ Fixed monthly installments for better budgeting
✅ Higher borrowing limit (up to RM500,000)
✅ Longer repayment terms (up to 10 years)
Cons of Personal Loans
❌ Longer approval time compared to credit cards
❌ Early settlement fee if you repay the loan before maturity
❌ Requires income proof & credit check for approval
📌 Example of Personal Loan in Malaysia (2025)
| Bank / Lender | Interest Rate | Loan Amount | Repayment Tenure |
|---|---|---|---|
| Maybank Personal Loan | 6.5% – 8.5% p.a. | RM5,000 – RM100,000 | 2 – 6 years |
| CIMB Cash Plus Loan | 4.88% – 14.78% p.a. | RM2,000 – RM100,000 | 1 – 5 years |
| AEON iCash | 8% – 12% p.a. | RM1,000 – RM100,000 | 6 months – 7 years |
| Bank Rakyat Personal Financing-i | 3.88% – 6.99% p.a. | RM5,000 – RM200,000 | 1 – 10 years |
📌 Conclusion: Choose a personal loan if you need a large amount of money and prefer a structured repayment plan.
🔹 3. When to Choose a Credit Card
✅ Best for:
✔ Everyday spending: shopping, dining, travel
✔ Emergency expenses with quick access to credit
✔ Earning rewards, cashback, or travel miles
Pros of Credit Cards
✅ Instant approval & access to credit
✅ Flexible spending – pay as you use
✅ Cashback, rewards, and travel perks
✅ 0% interest installment plans for purchases
Cons of Credit Cards
❌ Higher interest rates (15% – 18% p.a.) if you don’t pay the full balance
❌ Risk of overspending & debt accumulation
❌ Late payment fees & penalty charges
📌 Example of Credit Cards in Malaysia (2025)
| Credit Card | Annual Fee | Interest Rate | Key Benefits |
|---|---|---|---|
| Maybank 2 Gold | Free | 15% p.a. | 5x TreatPoints on dining, 5% weekend cashback |
| CIMB Cash Rebate Platinum | Free | 15% p.a. | Up to 10% cashback on selected spending |
| HSBC Visa Platinum | RM300 (waived first year) | 15% p.a. | 8x rewards points, travel insurance |
| RHB Visa Infinite | RM500 | 15% p.a. | 10% cashback on online transactions |
📌 Conclusion: Choose a credit card if you need quick access to funds, want cashback or rewards, and can repay in full each month to avoid high interest.
🔹 4. Personal Loan vs. Credit Card: Which One to Choose?
💰 Choose a Personal Loan if:
✔ You need a large amount of money (RM10,000+)
✔ You prefer structured repayment plans
✔ You want a lower interest rate
💳 Choose a Credit Card if:
✔ You need instant access to credit
✔ You can repay in full every month to avoid interest
✔ You want rewards, cashback, or travel perks
📌 Final Tip: If you have an existing credit card debt, consider a personal loan to consolidate your debt at a lower interest rate!
🔹 5. Alternatives to Personal Loans & Credit Cards
If neither option fits your needs, consider these alternatives:
1️⃣ Balance Transfer Credit Cards – Transfer existing credit card debt to another card with 0% interest for up to 12 months.
2️⃣ Overdraft Facility – Some banks offer overdraft services on your savings account for short-term liquidity.
3️⃣ Licensed Money Lenders – If you have bad credit, consider KPKT-registered money lenders as an option (higher interest).
4️⃣ P2P Lending – Platforms like Funding Societies or CapBay offer loans with flexible interest rates.
🔹 6. Conclusion: Which One is Right for You?
| Criteria | Best Choice |
|---|---|
| Large purchase (RM10,000+) | Personal Loan |
| Everyday spending | Credit Card |
| Lower interest rates | Personal Loan |
| Cashback, rewards, travel perks | Credit Card |
| Fast approval & convenience | Credit Card |
| Fixed repayment plan | Personal Loan |
| Debt consolidation | Personal Loan |
💡 Final Advice:
- If you repay in full monthly, use a credit card for cashback & rewards.
- If you need a large sum of money, go for a personal loan with lower interest.
- Avoid using credit cards for long-term borrowing due to high interest rates.
