Question:
Can Mufti please let me know if signing up for a credit card is permissible for muslims?
I understand that I am agreeing to pay interest if I do not pay back in time and that even responsible spenders can land themselves in an interest bearing repayment. I also understand that most needs can be covered by the debit card,
There are however many benefits to having a credit card, safety from fraud, points and incentives which really do add up, the chance to build ones credit score and insurance facilities are also included in many cases, grace periods at no interest. Many other things are much easier too like hiring a car for example.
Will it be permissible then to sign up for a credit card if I am quite confident that I will not land myself on an interest repayment?
Answer:
Carrying cash in our times has become a major risk hence many individuals prefer using a credit card for their convenience. Funds are easily available and they are accepted by most businesses worldwide. Similarly, a credit card is beneficial and useful when doing online transactions particularly when cash payment is not an option.
On the above basis, it is permissible to sign up for a credit card if one knows with certainty that one will pay the account within 55 days or within the interest free payment time allocated by the bank. As long as you are confident (as you have stated in your letter) that you will prevent yourself from landing into an interest-based repayment, by ensuring that you always opt for the “straight” payment option and not the “budget” option, it will be permissible for you to apply for and use the credit card. If you are not certain and fear exceeding the interest free payment time limit then you shouldn’t sign up for a credit card as dealing in interest is Haraam and a major sin.
Some of the benefits mentioned by you are questionable and should not be utilized such as points that come directly from the bank (and not from stores participating in the points programme), taking advantage of insurance policies, particularly if a subscription fee is required, etc.
Checked and Approved By:
Mufti Muhammed Saeed Motara Saheb D.B.