Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
It is not permissible to issue unsecured credit cards or use them if their terms involve the imposition of usurious interest.
Answering your question, The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, states:
What is a credit card?
The credit card is a document given by its issuer to a natural or a legal person on the basis of a contract between them enabling the second party to buy goods or services from a vendor who approves the document, without paying the price immediately as the document includes the issuer’s commitment to pay.
Payment is made from the account of the issuer who will afterwards charge the cardholder at regular time intervals. Some issuers used to impose usurious interest on the total outstanding balance that the cardholders owe to them, after due date of payment, while other do not.
Is it permissible to obtain an unsecured credit card?
- It is not permissible to issue unsecured credit cards or use them if their terms involve the imposition of usurious interest. This is so even if the card- holder intends to pay within the moratorium period before charging interest.
- It is permissible to issue unsecured credit cards that do not have a condition to charge interest on the debt. Permissibility of this transaction entails two further considerations:
- The card issuer is permitted to charge from the cardholder a specific fee at the time of issuing or renewing the card. Such amount constitutes the actual fee that the issuer deserves according to the services it provides to the cardholder.
- The issuing bank is permitted to charge a commission on the trader’s goods or services purchased by the cardholder, provided that such goods or services are sold at the same price whether in cash or credit.
- Cash withdrawal is considered a loan from the card issuer and is therefore not objectionable under Shari`ah if it does not involve a usurious interest. The service charge for withdrawal is not considered usurious because it is not associated with the loan amount or its duration in exchange for this service. However, any other charge over the actual services is prohibited for being Riba, which is prohibited by Shari`ah according to the Academy’s two resolutions no. 10 (10/2) and no. 13 (1/3).
- Unsecured credit cards are not permissible for the purchase of gold, silver, and currencies.
Almighty Allah knows best.
Source: IIFA