Are Credit Cards Haram in Islam? Many Muslims today use credit cards frequently and extensively, but are credit cards halal or haram?
There are many advantages to credit cards. With a credit card, you can make a major purchase and spread the payments over several months to properly balance your budget over the course of a month. Additionally, you can benefit from credit card payment protection in the event of defective items or if the vendor goes out of business, as well as receive incentives and cashback.
But the interest-bearing loan that will begin to accrue if you don’t make a payment on time is the core of a credit agreement. What then should a Muslim do?
Are Credit Cards Haram in Islam?
Even if the user is confident he will pay the bank within the allotted period, using a credit card is prohibited by Islam. because it involves a risk of paying interest, Credit Cards are Haram in Islam.
Credit cards are haram in Islam and are prohibited because the bank lends the cardholder money in exchange for interest; this interest represents the cost of the card’s annual subscription as well as other interest fees that must be paid to the bank if the cardholder is late with a payment.
The user must pay the bank a form of riba known as the cost of the card whether the payment is made on time or not.
Additionally, the user signs a contract with the bank, which obligates him to pay interest if he postpones payment. Additionally, this is prohibited since it is against Islamic law for a Muslim to commit to performing something that Allah has forbidden.
The user might believe that he can make his payments on time, but anything may happen to him and prevent him from doing so; as a result, he must pay the bank riba.
Also Read: List of Islamic banks in USA
Regarding this type of contract, Shaykh Ibn ‘Uthaymin (may Allah have mercy on him) said:
“A contract of this type is not permissible, because it involves riba which is the price of the card, and it also means committing to pay interest if payment is delayed.”
In another fatwa he said:
“This transaction is haram, because the one who enters into it commits himself to paying riba if he does not pay on time. This is an invalid commitment, even if he believes or thinks it most likely that he will pay it before the time is up, because circumstances may change and he may not be able to pay it off. This is a matter that is in the future, and no one knows what will happen to him in the future. So dealings of this type are haram.”
And Allah knows best.