ISLAMIC CREDIT CARDS

ISLAMIC CREDIT CARDS





Islamic Credit Cards are free from any Riba or Gharar. Riba consisting of interes and Gharar as uncertainty.



An islamic Credit Card adopts three Shariah contracts, namely:

- Bai Inah

- Wadiah

- Qardhul Hassan



Bai Inah comprises of two agreements: in the first one, the issuing bank sells a propriety to the customer at an agreed price. While in the second contract, the Bank re-purchases the propriety from the Client at a lower price. The difference should be the determined maximum profit for the bank.



Wadiah: The Bank will disburse the cash proceeds of the second agreement into the customer's Wadiah account created and maintained by the bank. The customer can use his/her account for cash withdrawals like the classic credit card, except that each payment will be backed by the cash held in his/her Wadiah account.



Qardhul Hassan is a facility granted during an emergency or difficult situation, which make the cardholder able to utilise higher than the available limit. The Qardhul Hasan amount would not be levied with any charges or fees.





The differences between Islamic and conventional credit cards:



No money lending: Since the transaction of credit card is based on trade (Bai'), the element of usury will be eliminated from the loan transaction that is applied in the conventional money lending



None compounding of profits: Profit margin for the cardholders is fixed for the whole period (between 35 and 60 months) and the profit is charged based on the remaining balance. The profit is calculated on a monthly basis, based on a outstanding due or monthly total transactions



Control on transactions/merchants: islamic credit card users are allowed to carry out only halal, or shariah compliant transactions. Declined are transactions for six categories of non-halal related activities, including bars, discos, night clubs, purchase of beers and gambling.