Q. I have always felt that the use of credit cards is permissible if one makes sure not to pay interest on one’s transactions. However, I saw a published ruling forbidding the very use of credit cards because it involves agreement to pay interest in certain cases. Please explain.
(Name and address withheld)
A. Some scholars find it easy to pronounce rulings of prohibition on questions put to them, when they may not be able to produce sufficient evidence to support such a ruling. In this case the ruling is based on the conditions imposed by the company or the bank issuing the credit card, rather than on the person’s own intentions and actions. The company requires that interest be paid when payment of transactions recorded within a month is delayed beyond the specified date of payment, or when one withdraws money in cash, rather than pay bills. But when the client takes out a credit card, Islam holds him accountable for what he does with it, not what the issuing company requires.
The normal conditions specify that the cardholder can pay his bills for purchases and services obtained, within a certain limit. Every month the issuing company sends him a bill showing the transactions made, and the total he owes, and stating a date of repayment. If he pays the total amount on or before that date, no interest is charged. If he pays less than the total amount, interest is incurred on the balance.
This means that the whole question of interest is up to the cardholder, not the company. If he intends to pay on time the whole amount due each month, then the whole procedure is valid and permissible. It is not right to forbid the entire agreement on the basis of an eventuality that may never occur. It may be said that he may forget to pay by the due date, or he may not have ready money. If the delay in payment is due to forgetfulness, God has forgiven us whatever slips we make as a result of forgetfulness. If he is short of money due to unforeseen circumstances, then this may qualify as a case of emergency which should be looked at within the relevant circumstances.
Besides, my reader says that he has arranged to pay his credit card bills through direct debit, which means that the card company sends the bill to his bank for payment, and the bank pays it on the due date, ensuring that there is never any delay. This covers all eventualities and ensures that interest is never charged on his credit card transactions. In other words, it shows that the man has taken sufficient precautions and has no intention whatsoever to put himself in a situation when interest may be charged from him. How can this be forbidden? If we were to forbid it on the basis of a situation that may never arise, we may as well say that having a bank account is forbidden because of the possibility that one may at one time or another be in debit and the bank would then charge interest. This will place people in great difficulty, when Islam is a religion built on the basis of making things easy. God says in the Qur’an: “God desires that you have ease. He does not desire that you be afflicted with hardship.” (2: 185)
As for the annual charge some card companies impose, this is also permissible, because it is a fee paid for the facility provided by using the credit card. You receive something in return for what you pay.