Is It Permissible to Make Payments by a Credit Card?

18 September, 2020
Q As-salamu `alaykum. I just wanted to know if it is permissible to use a credit card as long as you making payments on time and not paying interest. Or is just using something that is normally associated with interest making it 'contaminated' already? Jazak Allah khairan.

Answer

Wa `alaykum as-Salamu wa rahmatullahi wa barakatuh.

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:

If you know for sure that you can use the credit card without incurring any interest, it is permissible to sign such a contract and use the card.


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

What is a credit card?

The credit card is a new invention and Muslim scholars define it as a guarantee given by the issuer to the seller who accepts it. Some other scholars define it as a transfer of the debt by the debtor to another party, the issuer. Hence, it falls within the permissible transactions.

However, there are two problems, one for the issuer and the other for the user; this relates to the fact that the contract here usually contains an interest article if payment is delayed and if cash is withdrawn. Issuing such a card with this interest condition is not permissible in the Shari`ah. Islamic banks can’t issue it with such a condition.

Using Credit Cards

Accepting the credit card and using it, it is not the same especially that it has become very convenient and it removes hardship. For instance, in most countries you cannot book a room in a hotel or rent a car or make a plain reservation without a credit card.

Notice that the interest condition is not essential in the credit card. It has an “if”; i.e. if you don’t pay within a certain time. But believe me it is real grace period, and the condition is invoked; and if you withdraw cash from a machine, it is also invoked.

We certainly wish that the interest condition is not inserted in the contract. Unfortunately in most countries, there are no Islamic institutions that issue such cards, and even those cards issued in some countries are not really satisfactory because they are limited in scope and usability.

In other words, you are not signing a loan contract with interest but you are signing a contract that gives you the choice to make the interest applied or not.

Consequently, if you know for sure that you can use it without incurring any interest, you make the interest clause useless and it is permissible to sign such a contract and use the card.

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf
Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey