Is using a credit card halal?
Each card purchase is a short loan from the card company. If you repay it in full by the due date, nothing is added and the loan is permitted. If you carry a balance, the interest is riba. The card’s own interest clause is wrong, so the question is whether you can make sure it never applies.
The guidance
How do I use the card, and what does it cost me?
- I pay the full balance by the due date, so interest never appliesHalal · A loan · Qur’an 2:279Each purchase is a short loan from the card company, repaid in full with nothing added. Mufti Taqi Usmani allows this if you are confident you will always pay on time. The interest clause itself is wrong, so make sure it can never apply.Set up a direct debit for the full balance every month. A debit card or a fee-only Islamic card is safer still.Other views: The OIC Fiqh Academy does not allow signing up for a card whose terms charge interest, even if you intend to pay on time.
- I carry a balance from month to month and pay interest on itHaram · Riba · Qur’an 2:275Interest on an unpaid balance is an increase on a loan in return for more time. That is riba in its plainest form, whatever the rate. The same goes for cash withdrawals that charge interest from day one.Clear the balance as soon as you can and stop using the card on credit.
- I pay only a fixed yearly fee for the card, not linked to spendingHalal · Service feeA flat yearly or issuing fee pays for the card service. It does not grow with what you borrow or how long you take, so it is not interest. The commission the shop pays the card company is also allowed.
People also ask
I always pay my credit card in full. Is it halal to keep using it?
Yes, according to Mufti Taqi Usmani, provided you are confident you will always pay on time. Set up a direct debit for the full balance. Note that the OIC Fiqh Academy does not allow signing up for a card whose terms include interest, even with that intention.
Is the annual fee on a credit card riba?
No. A flat yearly or issuing fee pays for the card service and does not grow with what you borrow or how long you take. The commission the shop pays the card company is also allowed.
Are credit card cashback and points halal?
A reward paid by the card company from the shop’s commission is a gift for using the service, not an increase on a loan. Avoid rewards that only exist because you carry a balance.
Is a cash advance on a credit card halal?
Not when interest is charged from day one, which is usual. That is a money loan repaid with more.
Is a debit card or an Islamic charge card better?
Yes, they avoid the interest clause altogether. Islamic banks issue fee-only cards for this reason.
Related questions
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This guidance follows the Hanafi school as applied today by Mufti Taqi Usmani and the AAOIFI standards. Notes mark where the Maliki, Shafi’i or Hanbali schools differ. The four schools on riba →