Fatwa

Debit/Credit Card Fees

Question

Assalamu alaikum. I am confused if by mistake I am paying interest. I stopped using card and it is hard these days without using card.

Any debit/credit card whether prepaid or postpaid will charge some kinds of fee or they will not be in business. Postpaid cards charge interest (haram) from users. Prepaid card charge money for loading the card. If the fee is a percentage amount of loading fixed or not fixed , will this fee be interest? For example.
1) loading amount $100.00 fee 2% . $2.00
2) loading amount $200.00 fee 3% fee $6.00
Many merchants and card issuers charge the user a fee per usage. Usually this fee is fixed. For example
1) for any cash withdrawal postpaid credit cards charge interest (haram).
2) prepaid card and merchants charge a per usage fee to users. If a user uses the card for $100.00 fee 2% $2.00
If the user uses the card for $200.00 fee 2% $4.00.
Will the above fee be considered as a service fee or interest? I am confused. Please enlightened me.
Jajak Allahu khayra

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

A service fee by definition is in lieu of some benefit provided to the individual. Therefore, a debit card, prepaid card, as well as a credit card, may charge a percentage of the amount used because the service of convenience when making a purchase has been provided by the card issuer. Similarly, annual card charges are also permissible as they are in lieu of the entire card usage system that the cardholder gains access to. Furthermore, if either the debit or credit card charges a fee for making a cash withdrawal, that too is permissible as one is receiving the convenience of withdrawing cash from a machine which has been installed and maintained by the card issuer.[1]

As for credit cards, given that they intrinsically contain interest clauses for late payments, they should be avoided. In today’s world, a credit rating has an impact on an individual’s ability to make big purchases. Therefore, there is leeway to obtain a credit card provided one intends never to end up in a situation where interest will become due. The best method to ensure this is to set up a direct debit such that each time a purchase is done via the credit card, it is offset by an immediate payment from ones account/debit card.

And Allah Ta’āla Knows Best

Mufti Bilal Pandor

Concurred by
Mufti Muhammad Patel

Darul Iftaa Mahmudiyyah
Lusaka, Zambia

www.daruliftaazambia.com

[1] Contemporary Fatawa Mufti Muhammad Taqi Usmani pg 530-535, Maktabah Ma’ariful Quran