Praise be to Allaah.
It is permissible to use credit cards that are free of things
that are forbidden in sharee’ah, such as charging interest for late
payments, or charging a percentage of the money withdrawn, because that
comes under the heading of riba which is haraam. But if the bank charges a
set fee when issuing or renewing the card as a fee for the services offered,
and covering only the cost of those services, there is nothing wrong with
The Islamic Fiqh Council has issued a statement – no. 108
(2/12) – concerning non-covered credit cards (i.e., a card covered by money
pre-deposited in the card account), and the ruling on the fees charged by
There follows the texts of this statement:
The International Islamic Fiqh Council, belonging to the
Organization of the Islamic Conference, in its eighteenth session in Riyadh,
Kingdom of Saudi Arabia from 25 Jumaada al-Aakhirah 1421 AH to the beginning
of Rajab 1421 AH (23-28 September 2000 CE).
Based on the statement of the council no. 5/6/1/7 on the
subject of financial markets and credit cards, it was decided to give a
definitive answer on the shar’i way of dealing with credit cards and the
ruling on these cards in a subsequent session.
And in reference to the statement of the council in its tenth
session no. 102/4/10 on the subject of non-covered credit cards.
And after listening to the discussion on this subject by
fuqaha’ and economists, and referring to the definition of non-covered
credit cards as given in statement no. 63/1/7, according to this definition
the non-covered credit card is a financial document given by the issuer (the
issuing bank) to an individual or company (the card carrier) on the basis of
a contract that enables him to buy goods or services from companies who
accept it without having to pay on the spot because the issuer of the credit
card has to pay according to the contract, and the payment comes from the
account of the issuer, then this payment is demanded from the card-carrier
at regular intervals. Some of them (card issuers) charge interest on the
unpaid balance after a certain amount of time from the date of the bill, and
some do not charge interest.
(The council) has decided the following:
Firstly: It is not permissible to issue non-covered credit
cards if interest is stipulated, even if the card applicant is determined to
pay within the free period.
Secondly: It is permissible to issue non-covered cards if
there is no condition of paying interest on the original loan.
Based on that:
It is permissible for the one
who issues the card to charge set fees when issuing or renewing a card,
because these are fees to cover actual services
It is permissible for the
issuing bank to take commission from the company that accepts this card and
sells on that basis, provided that the company sells the product by credit
card for the same amount as it sells if for cash.
Thirdly: Cash withdrawals by the card carrier are a loan from
the issuer, and there is nothing wrong with that from a shar’i point of view
so long as it will not result in interest. Set fees that are not connected
to the amount or length of this loan are not regarded as interest.
Any charges in addition to the set charges, such as if the
charges exceed the amount required to cover the services offered, are haraam
because that is riba which is forbidden in sharee’ah, as was stated by the
council in its report no. 13 (10/2) and 13 (1/3).
Fourthly: It is not permissible to buy gold and silver or
currency with the non-covered card. End quote.
And Allaah knows best.