Is it Islamic Credit Card is Permissible in Islam?

Ahmad Hizamudeen Bin Hang TuahMuhamad Izudin Bin R.Azeman

Muhammad Fitri Hakim Bin Mihat

Definition of Credit Card

• Card , cheque , voucher, coupon give to individual.

• Card make the individual which is cardholder get a cash, good and service in credit.

• The cardholder will make the agreement with issuer of card (bank).

History of Credit Card

• New York 1951, Frank NcNamara America, Chairman of the Hamilton Credit Corporation with his old pals, Alfred Bloomingdale and his lawyer, Ralpd Sneider dinner at a top restaurant in New York

• However , he was forget to bring a wallet to pay the bill. So, contact his wife to bring money to pay the restaurant bill. This incident was embarrassed him

• He got an idea to start credt card when people can eat and drink without bringing money together

• He suggest to other restaurant and start the Dinner’s Club

• Customer will eat and drink in restaurant and Dinner’s Club will pay for it. Than, customer will pay to Dinner Club specific charge.

• Since then , America Express credit was introduced in 1958.

• Then credit card known as Visa was introduced and the uses of magnetic strip on the back introduced in 1970.

Modus Operandi Islamic Credit Card

TawarruqUjrah

Bai Al Inah

Tawarruq

BANK CUSTOMER

MERCHANTS

WADIAH ACCOUNT

Broker A Broker B

15

2

6

3

4

Ujrah

BANK CUSTOMER

CREDIT CARD ACCOUNT

MERCHANTS

1

5

2

4

533

Bai Al Inah

BANK CUSTOMER

WADIAH ACCOUNT

MERCHANTS

2

1

5

3

4

SANCTION RELATING TO THE USE OF CREDIT CARD

• Using a conventional credit card is within period allowed

~ In a case, a person intends to use the conventional credit card that is apply with the condition of Interest or usury, but the aims is to always care of the repayment period before the interest charged which is Riba.

= OIC International Fiqh Academy-Not Permissible

• Participation Fees, Renewal and Conversion Card~ The Sanction: It is Permissible. There is no conflict

from the perspective of Islamic law, it is considered as a fee set by the manufacturer for the services provided.

• Condition to terminate the contract according to the issuer only

~ The issuer has the right to terminate the contract even without the consent of the cardholder.

= The Sanction: The conditions are accepted and PERMISSIBLE

• Currency Conversion with the Credit Card (Money Exchange or 'As-Sarf').

~ Typically, the cardholder can use this card in many countries in the world to buy whatever goods he wanted, to use this card, the bank will pay the bills outside the country just as quickly with the currency of the country involved

= The Sanction : HARAM.

• Penalties For Late payment of Obligation bills for 'Credit Card.

~ As contained in the contract for the 'Credit card, that card holders will pay a fine due to the late settlement of compulsory bills within 30 days.

= The Sanction : HARAM, there are elements of Riba An-nasiah

• Interest or charge on renewal of Credit Card Bill.

~ As contained in the contract 'Credit Card' the cardholders that are not willing to settle the bill in full, then the remaining bills will be charged.

= The Sanction : HARAM, in Islam without any doubt it is prohibited due to Riba.

ISSUE RELATED WITH CREDIT CARD

• Different opinion among Muslim jurist.• Bay al Inah is invalid. ( according to imam Hanafi school, Imam Malik, Imam

Hambali)

• Bay al Inah is permissible. ( according to Imam Shafie)

• Less acceptable to some middle eastern investors because Inah legitimize riba.

CONCLUSION• As a conclusion, Islamic credit card is

permissible in Islam according to imam Shafie, it is because Bay al Inah have a perfect contract rule and requirements, and can help people based on our intention to help others.