Q: I am using a credit card for which the monthly bill is issued on the 1st of every month. If I do not pay the bill by the 15th, the bank automatically deducts the full outstanding amount from my account. I use the credit card only to avoid exposing my debit card details to merchants or hypermarkets. Is this halaal? Alhamadullah, my account never runs out of balance. What is the ruling?
A: The monthly fee which the bank charges the credit card holder is not permissible. This amount is riba (interest).
One is paying the bank this monthly fee in order to keep this credit facility open to him to qualify for credit loans whenever he requires.
In other words, one is paying the bank this money so that whenever he needs a loan from the bank, the bank will give him the loan. This is like telling someone "I will pay you R100 every month, and when I need an interest free loan, you should make it available to me."
It should be borne in mind that the credit card holder is charged this monthly fee irrespective of whether he uses the card and takes a loan during the month or not. Hence, this fee is not being paid for any valid service.
If he stops paying the monthly credit facility fee, this credit facility offered to him from the bank will be canceled.
Hence, this monthly fee is riba (interest) as it enters under the purview of the definition of interest.
Therefore, if the bank gives one a loan and one pays the loan before the loan accrues interest, one is still involved in the sin of interest due to him paying the monthly credit facility fee which is in itself interest.
And Allah Ta'ala (الله تعالى) knows best.
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