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THE ANNUAL FEE CHARGED ON A CREDIT CARD PDF Print E-mail

THE ANNUAL FEE CHARGED ON A CREDIT CARD

Q: 17- 'The scholars of Fiqh Academy have approved the use of credit cards as reported by Arab News. (15 May).

As you know, banks charge a fixed annual fee for credit cards use. Can I ask the bank to issue a credit card to me and offset their annual fee against the interest which I do not take from them? (Muhammad Salim Desai Alkhobar, Saudi Arabia)

A: The report of Arab News is not correct. In fact, the Islamic Fiqh Academy, after a preliminary discussion on the issue of credit cards, has deferred the matter to the next session without adopting a specific resolution in this respect.

However, in my view, the annual fee charged on a credit card cannot be termed as interest or riba. In fact, it is a service charge claimed by the issuing bank from the card holder against the different services provided by it. That is why the amount of this annual fee is never linked with the actual amount paid by the bank to the merchants on behalf of the card holder. This annual fee is charged even if the card holder does not use the card throughout the year. The  fee charged is a lump sum irrespective of the actual amounts of purchases. Moreover, the annual fee is so nominal that it has no relation to the prevalent rate of interest. Practically, the issuing bank or institution has to provide different facilities to the card holder, and the annual fee is not more than a reasonable charge for such services.

It is thus clear that the annual fee for the credit card is neither interest nor any impermissable charge according to Shariah, and it is a valid charge for the services rendered. Therefore, it will not be permissible in Shari'ah to offset this annual fee against the interest accrued to the card holder in the same bank. The reasons are twofold. Firstly, it is not permissible in Shariah to open an interest bearing account. Surplus money should always be deposited in a current account where no interest is receivable.

Secondly, if somebody has deposited his money in an interest bearing account erroneously he cannot use the amount of interest for his own benefit nor can he use it to settle any rightful claim against him. Since the annual fee of a credit card is a rightful claim against the card holder, he cannot set it off by the amount of interest accrued on his account.

Contemporary fatawaa

 
'I am an Indian Muslim Business-man, staying in Saudi Arabia, since 9 years, and a regular reader of Al-Balagh International. May Allah reward you in full, for your service to the Umma. I have few Questions in mind, I would be grateful if you answer them. PDF Print E-mail

Q: (8): 'I am an Indian Muslim Business-man, staying in Saudi Arabia, since 9 years, and a regular reader of Al-Balagh International. May Allah reward you in full, for your service to the Umma. I have few Questions in mind, I would be grateful if you answer them.

1. Can we take loan from Government Banks, Financiers, (in India) for the purpose of doing business, or constructing a house, and we have to pay interest. Heard some Muftees in India have permitted the businessmen to take loan. Is this allowed, in case of Dar-ul-Harb? The permission is given on the basis, that if Muslim takes loan and does big business, he will employ a big number of Muslim staff, and many unemployed Muslims can get job, and it is a matter of sawab. If we don't do it the Non-Muslims are doing it and all big business will be only in the hands of Kafirs. This is practical problem. Could you please comment?

2. If No is the answer to my above question, can you please let us know the way to do big business in India, without taking loan? I think it's impossible, and when I studied this carefully I found more than 95% of Muslim Industrialists, Exporters, and big Trading Groups, do take loan, just to be safe from the Govt. As you cannot declare your white money if you do, you have to pay heavy taxes. So the best way to show the source of income or cash money is loans from Bank, and to pay tax on this money is easy. I am really confused, and this is the main reason, I have never started business in India. Can you please solve this problem? Jazakallah Khair. (H.R. Salamn, Saudi Arabia)

A: According to the overwhelming majority of the Muslim jurists, there is no difference between Darul Islam and Darul-harb in the prohibition of riba. A transaction of riba is totally prohibited, no matter whether the other party to the transaction is a Muslim or a non-Muslim. Although Imam Abu Hanifah has allowed interest in a non-Muslim country with certain conditions, yet this view has not been approved by the majority of jurists, including a large number of Hanafi jurists themselves.'

In the early days of the Holy Prophe SAW. many Muslims used to enter into riba transactions with non-Muslims, but when riba was prohibited, they stopped this practice totally. The verses of the Holy Qur'an which prohibited riba did not differentiate between a Muslim and non-Muslim. Similarly there is no example in the days of the Sahabah rdi. where any one of the Sahabah entered into a riba transaction with a non-Muslim after the prohibition was enforced.

Therefore, one cannot be advised to take an interest-bearing loan, even in a non-Muslim country. I have heard of some Indian Muslims (in Bombay) who are trying to establish an Islamic bank or a financial institution to be run on the basis of Islamic modes of financing. You should approach them for your financial requirements. They may help you in this respect.

Contemporary fatawaa

 
The Finance Company buys cars, Machinery, equipment etc and sells the same to the clients. Sometimes the clients: PDF Print E-mail

Q: (6):  The Finance Company buys cars, Machinery, equipment etc and sells the same to the clients. Sometimes the clients:

a) Return the goods.

b) Cannot pay for the goods.

Can the Finance Company retake the goods at a price less than that at which the goods were originally sold to him?

A: In a case where the buyer could not pay the price of the goods sold to him it is not permissible for the seller to repurchase the same goods from the buyer at a lesser price. However, if the commodity has been subjected to depreciation, the seller can repurchase it at a depreciated price according to the market valuation.

Contemporary fatawaa

 
Can Zakat money be given to Non-Muslims i.e. Christians and Hindus. PDF Print E-mail

Q: (7) : (1) Can Zakat money be given to Non-Muslims i.e. Christians and Hindus.

(2) Can Zakat be given to persons who are AleRasool i.e. Syed Ahle Bait.

(3) A loan is given by housewife to a servant over a period which he is unable to repay. Can it be adjusted to Zakat for the current year?

A: (1) Zakat money cannot be given to a Non-Muslim.

(2) Zakat cannot be given to a person who is from the progeny of Hashim, the grandfather of the Holy Prophet saw. Such persons should be supported by other sources like gifts and presents, but Zakat should not be given to them.

(3) Zakat cannot be paid through relieving a debtor from the amount of loan advanced to him. If the housewife wants to adjust her loan to the amount of zakat, she can give to her servant the amount of zakat in cash, then ask him to pay her loan. If he pays his loan out of that money, it will be permissible for the housewife to receive it back.

Contemporary fatawaa

 
Banks charge a commission for providing a Guarantee to clients purchasing goods etc. Can such a commission be added to the costs of the client? PDF Print E-mail

Q: (5): (a) Banks charge a commission for providing a Guarantee to clients purchasing goods etc. Can such a commission be added to the costs of the client?

(b) Can the Finance Company charge a commission for providing a Guarantee for goods purchased by its client?

A: Any fee charged on a Guarantee is not permissible in Shariah. Therefore, any amount paid as a fee for a  Guarantee cannot be added to the cost of the Commodity in a transaction of Murabahah.

Contemporary fatawaa

 
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