Islamic Ruling on Credit Cards

In the Name of Allah, the Most Gracious, the Most Merciful Praise be to Allah(The Almighty), the Cherisher and the Sustainer of the worlds. Peace, prayers, and blessings be upon our illiterate Prophet Muhammad and his family and companions I would like to thank you for the great confidence you place in me, and I implore Allah Almighty to help us serve His cause and render our work for His Sake. As for your Question : Using Credit card? Introduction Credit card contract has a conditional interest (Riba) clause. Credit cards may be used to pay for purchases and to withdraw cash. The Rule Using Credit card has two opinion of thought in islam: The First: Using Credit card is permissible in Islam as long as one does not delay paying the bills and pay the total amount on time. The Second: Using Credit card is forbidden (haram) in Islam even if the user is certain that he will pay the bank within the time. The first Opinion is based on that using the credit card is like using the modern banking system. Most of the modern banks are interest-based and Muslims have to use them because interest free banks are not available. It is permissible to use the services of these banks without getting involved in interest. The second opinion base their ruling on hadith narrated by Ibn Mass’ood “Allaah has cursed the one who consumes Riba (i.e. usury or interest), the one who gives it to others, the one who records it and the one who witnesses it (its transaction).” He said: “All of them are equal in sin.” [Muslim] So, having a credit card and dealing with it, itself is surrounded by many prohibitions. Everyone who demands a credit card has to agree to the terms mentioned in the contract, i.e. that he is ready to pay interest, thus he freely approves of dealing with interest. Therefore, whenever one delays in any payment he pays a certain percentage as interest. Merely signing such a contract is forbidden, since this clearly indicates that he approves of this transaction. Very likely the one who has such a card is practically involved with interest whenever he\she delays a payment or not. Sh. Khaled Abdel Hamid Alazhari’s Fatwa: I conclude that it contains usury (RIBA) which is forbidden in Islam, so it should not be used. The need and easiness in marketing by the internet is not a sound reason (darorah) that entitles you to enter a contract that involves Riba. You can solve this problem by using pre-credit card.It’s permissible because you spend your own money with the same benefits of using credit card without committing sins. But if you have a sound reason or necessity (darorah) You can use them with two condition: Do not delay paying the bills and pay the total amount on time. Do not withdraw cash money. And Allah knows Best Sh. Khaled Abdel Hamid Alazhari Imam of Ottawa Mosque

Principles

The Shari’ah prohibits the payment of charges for the renting of money (riba, which in the definition of Islamic scholars covers any excess in financial dealings, usury or interest) for specific terms, as well as investing in businesses that provide goods or services considered contrary to its principles (Haram, forbidden). While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community. "While a basic tenant of Islamic banking - the outlawing of riba, a term that encompasses not only the concept of usury, but also that of interest - has seldom been recognised as applicable beyond the Islamic world, many of its guiding principles have. The majority of these principles are based on simple morality and common sense, which form the bases of many religions, including Islam. "The universal nature of these principles is immediately apparent even at a cursory glance of non-Muslim literature. Usury was prohibited in both the Old and New Testaments of the Bible, while Shakespeare and many other writers, particularly those writing in the 19th century, have attacked the barbarity of the practice. Much of the morality championed by Victorian writers such as Dickens - ranging from the equitable distribution of wealth through to man's fundamental right to work - is clearly present in modern Islamic society. "Although the western media frequently suggest that Islamic banking in its present form is a recent phenomenon, in fact, the basic practices and principles date back to the early part of the seventh century." (Islamic Finance: A Euromoney Publication, 1997)

Islamic Credit Cards

What is an Islamic Credit Card?

One of the latest banking products offered by Islamic institutions, is the Islamic credit card. Using the principles of Al Bai Bithaman Ajil (deferred payment sale), the bank issues an interest-free and penalty free credit card. As goods are purchased using this credit card, you're the bank will render the transaction on your behalf and simultaneously sell it back to the customer. This credit is payable over a deferred period through installments within a certain time frame.

 

 

Features on Islamic Credit Card
  •  This product is open to Muslims as well as non-Muslims.
  • A small fee may be charged annually for the credit card.
  • You may enjoy the value-added benefits of conventional credit cards e.g. bonus points, gifts, shopping discounts, travelers' cheques etc.
  • You may need to have some kind of collateral of some form, that has been agreed to earlier with your financial institution, may be required.
  •  A credit limit will be based on your collateral value.
  •  It may be possible to obtain general Takaful coverage.
  •  Some banks may provide other services such as zakah payment via this credit card.
  •  It may be possible to apply for a supplementary card.

 

 

The concept of 'Al-Bai' Bithaman Ajil'

Al-Bai' Bithaman AjilIn modern Islamic banking, the term refers to a buying and selling transaction between the bank (or financial institution) and the customer, whereby the former buys a property (or an asset, e.g. a house) at the prevailing market price and sells it to the customer at a mark-up price where payments are made by installments over a period of time agreed upon by both parties. The profit earned by the bank is legitimate from the Shari'ah point of view since the transaction is based on a sale contract rather than a loan contract. Any predetermined profit arising from the loan is prohibited in Islam as it amounts to Riba.

 

 

The authaurity on Islamic Credit Cards

Prof. Dr. Mohd. Ma'sum Billah has written [1]Islamic Credit Card in Practice .  As an authority on the conecept of Isalmic Credit cards.  He is Professor of Islamic Financial Regulations, Assoc. Professor of Law (Insurance, Takaful, Islamic Banking, Finance & E-Commerce), Faculty of Economics and Management Sciences, International Islamic University Malaysia He is also an Adviser and Consultant to several Companies and Institutions.

Islamic Banking

Modern banking system was introduced into the Muslim countries at a time when they were politically and economically at a low ebb, in the late 19th century. The main banks in the home countries of the imperial powers established local branches in the capitals of the subject countries and they catered mainly to the import export requirements of the foreign businesses. The banks were generally confined to the capital cities and the local population remained largely untouched by the banking system. The local trading community avoided the “foreign” banks both for nationalistic as well as religious reasons. However, as time went on it became difficult to engage in trade and other activities without making use of commercial banks. Even then many confined their involvement to transaction activities such as current accounts and money transfers. Borrowing from the banks and depositing their savings with the bank were strictly avoided in order to keep away from dealing in interest which is prohibited by religion.

With the passage of time, however, and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. Local banks were established on the same lines as the interest-based foreign banks for want of another system and they began to expand within the country bringing the banking system to more local people. As countries became independent the need to engage in banking activities became unavoidable and urgent. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals. The story of interest-free or Islamic banking begins here. In the following paragraphs we will trace this story to date and examine how far and how su cessfully their concerns have been addressed.

Credit Cards

Thank you, firstly for visiting this blog, this blog is setup to inform you about which credit card is the best, we will be looking into many different types of credit cards but predominantly 0% interest cards to help you find the best deal. It's very difficult in some cases to get these cards unless you have an excellent credit history.

Throughout this website we will explore the different credit cards and help you find the right one for you, we will do the hard work by contacting the companies and findout out about each card, reviewing them and trying to fit it for your needs. 

I have gone through a number of credit cards and I am currently on a Capital one card, having tried out halifax, paypal and natwest.

Stay tuned to learn more over the next few days. 

More Articles...

  1. Which credit card