Cases of Riba-Based Transactions #4
Questions:
1.Taking interest and offsetting losses with riba. I have a small saving in a Bank Account for which I have received interest. I am in the process of clearing it up now. However, I also had previously invested in a few Banking stocks (unaware that it was wrong), which have depreciated in value. can I set off my loss in the banking stocks with the interest on my savings account?.
2. Ruling on receiving salary via a riba-based bank and keeping part of it in that bank. I am a Moroccan man. I work in a company and I used to receive my salary directly from my employer. But he decided to transfer my salary to the bank. What is the ruling on such a transaction? I will not withdraw all my salary from the bank at the end of the month. Is this permissible or not?.
3. Depositing money in a riba-based bank. Is it allowed for me to keep the money in the Bank for transactions only if I will not take any Interest on the deposited money? But obviously, the bank will use this interest for themselves
4. Statement of the Fiqh Council on credit cards and taking fees for them. What is the ruling on credit cards (visa card) from Islamic banks, knowing that they are free of interest? Even if one does not pay at the end of the permitted time. They only take yearly fixed fees for this service.
5. Using credit cards to withdraw money. Banks give their clients a card called “Visa” which enables the customer to withdraw money from the bank even if there is no money in his account at that time, on the basis that after a specific amount of time has passed, he will repay the bank, and if he does not pay within this set time, the bank will charge interest, more than the amount withdrawn. The customer also pays an annual fee for using this card. Please tell us the ruling on using these cards, may Allaah reward you with good.
6. Delegating someone to buy something using a credit card. I am in Africa and needs a good from the US both cannot buy it as it can only be bought using a credit card from a website. However I have a friend in the US who have a credit card and is willing to buy it on the basis that I send him the exact amount he spent. Would this be acceptable in Islam?
7. Ruling on using a credit card which has riba-based conditions in order to build a credit score and thus reduce the cost of insurance premiums. I am an international student in XXX . My question is, can I use a credit card with the intention of building a credit score? Here a good credit score is a major factor in calculating insurance premiums, e.g. auto insurance and health insurance etc. Without any credit score the insurance companies charge us twice or thrice the amount with the same level of benefits. I am talking about the minimum insurance scheme that we must buy to obtain a legal permit to drive. Having a good credit score will not give us any extra insurance benefits other than paying the same amount as those who do have a good credit score. To clarify my situation further, I do not need a credit card for any other reason as I have yet to use one (this is my third year in US). Also I am aware of Fatwa # 97530 on your website. FYI, all credit card contracts here include the payment of interest on the principal amount after a specified time.
8. Ruling on gifts given to one who has a Visa card. I have a Visa card that does not involve riba, i.e., I use it without the bank taking any interest from me. But Visa has a system called a points system or “Visa Rewards”. Every time I buy something using this card, they give me one point for every two dollars, and with these points I can buy travel tickets or pay off electricity and phone bills. Now I have a considerable number of points. Is it permissible for me to use these points or are they regarded as riba? If they are riba, is it permissible for me to give their value in charity?.
Answer
1. Praise be to Allaah.
The one who has repented from riba should not take anything but the capital of his wealth only, because Allaah says (interpretation of the meaning): “but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums)” [QS al-Baqarah 2:279]
It is not permissible to take anything more than that; if a person has taken it he must get rid of it by spending it on charitable causes.
In the question, there are two issues which have nothing to do with one another, and we must deal with them separately: the interest which has been taken, and offsetting the depreciation in the value of shares with this interest.
With regard to the first issue: putting money in a riba-based bank and taking more money than the original capital. The scholars of the Standing Committee said: The interest which the bank pays to depositors on the money that they deposit is considered to be riba (usury, interest), and it is not permissible to make use of this money. The person must repent to Allaah from depositing money in riba-based banks, he should withdraw the money that he deposited and the interest, then keep his original amount and spend the interest in charitable causes, such as on the poor and needy, renovating public facilities, and so on. (Fataawa Islamiyyah, 2/404.)
Shaykh ‘Abd al-‘Azeez ibn Baz (may Allaah have mercy on him) said: With regard to the interest that the bank gives you, do not give it back to the bank and do not consume it, rather spend it on charitable causes such as giving it to the poor, renovating public washrooms, and helping debtors who are unable to pay off their debts. (Fataawa Islamiyyah, 2/407)
With regard to the second issue: offsetting the depreciation in the value of shares with this interest, it is not permissible to do this, because it is not permissible for you to take this money and benefit from it, as stated above. The person who buys shares has to bear losses in the value of his shares from his own money; he does not have the right to offset those losses with money that he acquires from haraam sources.
The fact that he entered into this transaction when he was unaware of the fact that it is haraam means that he is absolved of any sin; he is excused by the fact that he did not know. But that is not a reason for allowing him to benefit from the interest by using it to offset these losses. And Allaah knows best.
2. Praise be to Allaah.
Riba-based banks are institutions that are based on evil and corruption, because they are based on a system that is one of the major sins, namely riba. Hence they are institutions that are opposed to Allaah and His religion. The warning against consuming riba includes all those who establish these institutions and participate in them, and deposit their money with them, and who give permission for them to be established and so on. So let the Muslim beware of having any connection to these institutions unless he is forced to do so and cannot find any alternative.
Among the cases of necessity that exist nowadays is what some countries and public and private institutions do, where they give their employees their salaries and dues via riba-based banks. This action is haraam for these parties, because it strengthens the position of those banks, but there is no sin on the employee if he receives his salary through those riba-based banks, but that is subject to certain conditions:
1 – That the employee cannot find any other way apart from that riba-based bank. If he can receive his salary directly from his employer or through an Islamic bank, then he has no excuse.
2 – That he should not leave any part of his salary with that riba-based bank, otherwise he will be supporting them.
The solution for the one who has no choice but to use those banks is to open a current account and have his salary transferred to it. It is well known that current accounts are less serious than savings accounts, as current accounts are readily accessible and the bank cannot make use of these funds.
The scholars of the Standing Committee said: There is nothing wrong with taking salaries that are paid via the bank, because you are taking it in return for your work for someone other than the bank. But that is subject to the condition that you do not leave it in the bank after it has been transferred to you because of the interest. End quote. Shaykh ‘Abd al-‘Azeez ibn Baaz, Shaykh Saalih al-Fawzaan, Shaykh ‘Abd al-‘Azeez Aal al-Shaykh, Shaykh ‘Abd-Allaah ibn Ghadyaan, Shaykh Bakr Abu Zayd. Fataawa al-Lajnah al-Daa’imah (13/288, 289).
Shaykh Muhammad ibn Saalih al-‘Uthaymeen (may Allaah have mercy on him) said: There are some organizations, companies and others, who make their employees open bank accounts in order to transfer their salaries to the bank. If a person cannot receive his salary except by this means, there is nothing wrong with it, and he may open an account, but he should not open an account with his own money, i.e., he should not put a penny of his own money in it, but with regard to receiving his salary via this means, there is nothing wrong with it. End quote. Liqaa’aat al-Baab il-Maftooh (111/question no. 10).
There is nothing wrong with leaving money in the riba-based bank in order to protect it, but that is subject to certain conditions.. And Allaah knows best.
3. Praise be to Allaah.
It is not permissible to put money in a bank that deals in riba (usury or interest), and the Muslim should not do that unless he is forced to, in which case the following three conditions apply:
1 – He should have the need to do that, meaning that there is no safe place to keep his money except this bank. If he can find another place where he can keep his money apart from this riba-based bank, then it is not permissible for him to deposit his money in this bank which deals with riba.
2 – The bank should not deal one hundred percent with riba; if the bank’s dealings are one hundred percent with riba then it is not permissible to deposit his money with them at all, if you deposit money in the bank then in this case you can be certain that you have helped the bank engage in riba, and it is not permissible to help anyone with riba.
3 – The depositor should not take any profit, because if he takes any profit that will be riba, and riba is haraam according to the Qur’an and Sunnah and the consensus of the Muslims.
With regard to the questioner’s saying that if he does not take the interest the bank will take it:
This is not interest, rather it is riba which is haraam, and it belongs to the bank in the first place. The depositor does not have the right to take anything of it, because Allaah has commanded us to abstain from riba when He said (interpretation of the meaning):
“O you who believe! Be afraid of Allaah and give up what remains (due to you) from Ribaa (from now onward) if you are (really) believers” [QS al-Baqarah 2:278]
And He warned against taking riba when He said:“And if you do not do it, then take a notice of war from Allaah and His Messenger” [QS al-Baqarah 2:278-279]
It should also be noted that depositing this money in the banks is not regarded as depositing it in the shar’i sense, because depositing something in shari'a means leaving it with someone for safekeeping, which means that the owner cannot use it; but when money is deposited in the bank, the bank uses the money, so it is a form of lending, not depositing for safekeeping. The fuqaha’ have explained this point, that if the depositor gives the keeper permission to use his money, it is no longer a deposit for safekeeping, rather it is a loan. (Therefore anything added to the principle is riba). And Allaah knows best. May Allaah send blessings and peace upon our Prophet Muhammad. See Fataawa Manaar al-Islam, 2/433-440 by Shaykh Ibn ‘Uthaymeen.
4. Praise be to Allaah.
It is permissible to use credit cards that are free of things that are forbidden in sharee’ah, such as charging interest for late payments, or charging a percentage of the money withdrawn, because that comes under the heading of riba which is haraam. But if the bank charges a set fee when issuing or renewing the card as a fee for the services offered, and covering only the cost of those services, there is nothing wrong with that.
The Islamic Fiqh Council has issued a statement – no. 108 (2/12) – concerning non-covered credit cards (i.e., a card covered by money pre-deposited in the card account), and the ruling on the fees charged by the banks. There follows the texts of this statement:
The International Islamic Fiqh Council, belonging to the Organization of the Islamic Conference, in its eighteenth session in Riyadh, Kingdom of Saudi Arabia from 25 Jumaada al-Aakhirah 1421 AH to the beginning of Rajab 1421 AH (23-28 September 2000 CE). Based on the statement of the council no. 5/6/1/7 on the subject of financial markets and credit cards, it was decided to give a definitive answer on the shar’i way of dealing with credit cards and the ruling on these cards in a subsequent session.
And in reference to the statement of the council in its tenth session no. 102/4/10 on the subject of non-covered credit cards. And after listening to the discussion on this subject by fuqaha’ and economists, and referring to the definition of non-covered credit cards as given in statement no. 63/1/7, according to this definition the non-covered credit card is a financial document given by the issuer (the issuing bank) to an individual or company (the card carrier) on the basis of a contract that enables him to buy goods or services from companies who accept it without having to pay on the spot because the issuer of the credit card has to pay according to the contract, and the payment comes from the account of the issuer, then this payment is demanded from the card-carrier at regular intervals. Some of them (card issuers) charge interest on the unpaid balance after a certain amount of time from the date of the bill, and some do not charge interest.
(The council) has decided the following:
Firstly: It is not permissible to issue non-covered credit cards if interest is stipulated, even if the card applicant is determined to pay within the free period.
Secondly: It is permissible to issue non-covered cards if there is no condition of paying interest on the original loan.
Based on that:
(a)It is permissible for the one who issues the card to charge set fees when issuing or renewing a card, because these are fees to cover actual services
(b)It is permissible for the issuing bank to take commission from the company that accepts this card and sells on that basis, provided that the company sells the product by credit card for the same amount as it sells if for cash.
Thirdly: Cash withdrawals by the card carrier are a loan from the issuer, and there is nothing wrong with that from a shar’i point of view so long as it will not result in interest. Set fees that are not connected to the amount or length of this loan are not regarded as interest.
Any charges in addition to the set charges, such as if the charges exceed the amount required to cover the services offered, are haraam because that is riba which is forbidden in shari'a, a was stated by the council in its report no. 13 (10/2) and 13 (1/3). s
Fourthly: It is not permissible to buy gold and silver or currency with the non-covered card. End quote. And Allaah knows best.
5. Praise be to Allaah.
This transaction is haraam because it involves a commitment to pay ribaa (interest) if one does not pay within a certain time. This is an invalid commitment even if a person believes or thinks it most likely that he will pay before the time is up, because things may change and he may not be able to fulfil the commitment. This is a matter which has to do with the future and man does not know what will happen to him in the future. So this kind of transaction is haraam. And Allaah knows best.
6. Praise be to Allaah.
It is not permissible to use credit cards which oblige the cardholder to pay a penalty in the event of late payment. If your friend's credit card is free of this condition, then there is nothing wrong with you delegating him to buy what you want and sending him the money later on. But if the card has this condition, then it is not permissible for you to delegate him to buy something for you with this card, because if it is not permissible for a person to do a thing, it is not permissible for him to delegate someone else to do it.
It says in al-Mawsoo’ah al-Fiqhiyyah al-Kuwaitiyyah (25/66): “It is not acceptable to delegate to someone else that which it is not acceptable for him to do himself because the agent is acting on his behalf.”
Shaykh Ibn ‘Uthaymeen said: “This is a principle; everyone who has the power to dispose of a thing is entitled to delegate it to someone else or be delegated by someone else; and if he does not have the power to dispose of it, he does not have the right to delegate it to someone else or be delegated by someone else”. Al-Sharh al-Mumti’ (9/90).
What you have to do is look for another way to buy the items you need, especially as there are now a number of credit cards on which you may put a certain amount of money and then use them within the limits of this amount, without there being any interest or riba.
If this credit card is free of this riba-based condition, there is nothing wrong with you delegating your friend to buy things for you, then you can send the money to him later on. This is not regarded as buying currency for currency, in which a hand-to-hand transfer would be stipulated; rather it is a loan to you from your friend. And Allaah knows best.
7. Praise be to Allah.
It is permissible to use a credit card if it is free of the following reservations:
1. Stipulation of interest or a penalty to be paid in the event of late payment
2. Charging a fee for issuing a non-prepaid credit card that is greater than the actual costs
3. Charging a percentage of withdrawals if the card is non-prepaid. It is permissible to charge the actual cost only; anything more than that is riba (usury).
4. Buying gold, silver and currency with a non-prepaid card.
This Islamic Fiqh Council has issued a statement to that effect. If the credit card is free of the reservations mentioned above, but there is a stipulation of a penalty in the event of late payment, then some scholars regard it as permissible to use such cards in the West, when it is not possible to do some transactions without a credit card. We put the following question to Shaykh Muhammad ibn Saalih al-‘Uthaymeen (may Allah have mercy on him):
Credit cards include a riba-based condition whereby if I delay payment, they will impose on me a penalty, but where I live in America it is not possible for me to rent a car or a shop or avail myself of many public services without a credit card, and if I do not use a credit card I will experience unbearable difficulties. If I commit to paying off at a certain time, so that I will not have to pay interest, does that make it permissible for me to use this card in the difficult situation in which I am living?
He answered as follows:
If the hardship is definite, and the likelihood of delay in payment is remote, then I hope that there is nothing wrong with it.
Question: does the stipulation of interest (riba) render the contract invalid or not?
Answer: If there is an invalid condition in the contract, it does not render the contract invalid for several reasons:
1. Necessity
2. Because it is not going to happen, because the one who is signing this contract thinks it most likely that he will pay on time.
Because the individual thinks it most likely that he will pay on time, and the condition is not going to happen (he is not going to delay payment), and because it is a matter of necessity – and this last point is the most important – I hope that there will be nothing wrong with this, because we have a definite matter, which is necessary, and we have an uncertain matter, which is a delay in payment. So giving precedence to that which is definite is more appropriate. And Allah knows best. End quote.
What appears to be the case from your question is that you have no need to use this credit card, and this is by the grace of Allah to you.
If that is the case, then it is not permissible for you to have the card issued or to use it in order to build a good credit score so as to reduce insurance payments. This need can be met by spending (extra) money, and money may be spent to protect one’s religious commitment.
So long as an individual is not faced with extreme hardship that he cannot relieve except by using a haraam credit card, it is not permissible for him to use it or have it issued, especially if it involves paying extra fees (greater than the actual cost, which is regarded as riba) for issuing or renewing the card, or making withdrawals, because riba is not permissible except in cases of necessity.
If it is possible to use a prepaid card, then there is nothing wrong with it, because that is not a loan and does not involve any riba-based conditions, and there is nothing wrong with paying fees for it.
This applies if it can be used to build a good credit score and will help to reduce insurance premiums; in this manner, you can achieve what you want without doing anything that is unlawful. And Allah knows best.
8. Praise be to Allaah.
If a person puts some money in the bank to use it on the Visa card, by doing so he is lending to the bank, so it is not permissible for him to take gifts or rewards from the back or from those who cooperate with it, because they are gifts in return for a loan, so they are included in the words, “every loan that brings a benefit is riba.” See: al-Manfa‘ah fi’l-Qard, p, 461
Dr. Muhammad al-‘Usaymin (may Allah preserve him) was asked: What is your opinion on current accounts which are not savings accounts; rather they are for safeguarding money until one needs it, and the bank gives gifts and rewards for them according to the amount deposited in the bank. What is your opinion on the Visa card from the Ahli bank and the rewards offered by the bank or on Saudi airlines that deal with Visa?
He replied:
Putting money in a riba-based bank when there is no case of necessity is haraam; the prohibition increases if there are Islamic banks in the country. It is not proper for the Muslim to accept gifts from the riba-based bank in return for current accounts, and they are a kind of riba unless he takes them to get rid of them if he has no choice but to open an account, as mentioned above. The credit cards issued by riba-based banks are completely haraam, and those that are called Islamic but are based on reversing the transaction (by putting money in the credit card account before spending on the card, instead of spending on the card and then paying what is owed), like the Ahli credit card and the American Bank credit card, are also haraam. And Allah knows best. End quote.
What you have to do is get rid of these rewards by giving to the poor and needy or to public projects, but they are not regarded as charity; rather it is getting rid of haraam wealth. And Allah knows best. (Source: https://islamqa.info/en/ ), Related matter were combined.
*******************************
Questions were answered by Islam Q&A Team supervised by Syaikh Muhammed Salih al-Munajjid. Editor: Ustaz Sofyan Kaoy Umar. e-mail: ustazsofyan@gmail.com
Questions were answered by Islam Q&A Team supervised by Syaikh Muhammed Salih al-Munajjid. Editor: Ustaz Sofyan Kaoy Umar. e-mail: ustazsofyan@gmail.com