Currency Conversion in Credit Card Purchases

Answered according to Hanafi Fiqh by

Answered by Shaykh Faraz Rabbani

In credit card purchases between differrent currencies (i.e. when the credit card is based on a different currency than the purchased item), the currency conversion is done by the bank/credit card company without the card user’s knowledge of the rate. For example, a Euro-based credit-card user purchases a $ X item. At the time of card payment, the bank/credit card will bill him, for example Euro Y (based on some rate that the bank/credit card used on that purchase day). I’m not sure how the bank/credit card determines the rate. It might be by using the on-going market rate.

Would this be impermissible, since the card user would not know at the time of purchase how much precisely he will be charged?

In the Name of Allah, Most Gracious, Most Merciful

Walaikum assalam wa rahmatullah,

I pray that this finds you well, and in the best of health and spirits. May Allah grant you all good and success in this life and the next.

The fatwa on such charge is that if there is an objective basis for establishing the exchange rate stipulated in the contract between the bank or credit card company and the individual, then there is an implicit acceptance of the variance, and such uncertainty is considered minor and unlikely to lead to dispute or harm and thus overlooked.

And Allah alone gives success.

Faraz Rabbani

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