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How do Islamic Credit Cards Work? Banking


Do you need to be Muslim to use it? Are there purchase restrictions? What
by Gavin Pereira
about payments? All this and more about Islamic credit cards!
on May 24 2017

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An Islamic credit card varies from a conventional banking credit card but
essentially, both cards carry out the same function.

Using an Islamic card also allows you to make upfront purchases and pay
for all of it on a later date. However, Islamic credit cards function on
different fundamentals as conventional banking cards do.

Islamic cards are Shariah compliant and therefore limits purchases to


halal transactions only. In most cases, this would relate to the food and
beverage industry. Bars and restaurants that serve alcohol or any form of
non-halal eateries will not accept an Islamic credit card. These aren’t the
only differences from standard credit cards however.

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Personal nance tips to help you manage
your budget and stay ahead of the banks.

How Else is it Different?


An Islamic card uses the concept of Ta’widh for its transactions. This is
an agreement between the nancier and the recipient. The bank acting
as the nancier, is obliged to provide funding and the recipient is obliged Maybank To Charge
to make payments in return for the nancing he receives. Customers For Using
Cash And Cheques For
Like all credit cards, you make payments upon the stipulated statement Card And Loan
Repayments
date. However, if your surpass the deadline or do not cover the full This Week’s Tesco
amount, the credit card company does not charge you interest. It instead Malaysia Catalogue
charges a fee or what is called a pro t rate on the remaining balance.

This is because it is against Islam to impose interest, which is known as How To File Your
riba. That does not mean there are no charges involved. To counter that, Income Tax When
the Islamic credit cards charge a fee or pro t rate instead. You're Freelancing

Another concept that it uses is Ujrah where a payment is made in


Maybank Service
exchanged for services, bene ts and privileges that are being offered to Interruption – Online
the cardholders. This is how credit cards like CIMB Islamic MasterCard, Banking, Cards, TAC
can charge a fee for services like its cash advance feature. Services All Currently
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Find More

Why Should You Get It?


We are familiar that purchases on Islamic credit cards are limited to
products and services that are halal in nature. That obviously takes a
part the purchasing options away for the non-Muslims, making them lean
toward a conventional banking card.

However, one of the greatest bene ts you would receive on an Islamic


card is, there are no compounding interest or fees incurred on
outstanding balances.

If you do tend to make partial payment on your cards, non-compounding


fees or interest could save you some money.
Takaful Bene ts
It is almost impossible to stress how important an insurance policy is to
one’s life, especially in a time of need.

Having an Islamic credit card ensures you enjoy complimentary Takaful


protection whenever you travel, which is similar to the credit card bene t
conventional banking provides you.

However, certain banks like Bank Rakyat Gold Credit Card-i, takes it a step
further. Should you endure some form of permanent disability or suffer
from death, the credit card offers a complimentary family Takaful bene t
that clears off all your outstanding balance.

The bene ciary of the card holder will also receive a compassionate sum
of up to RM1,000. That would at least help to keep your estate and other
assets untouched, as the credit card company will not be siphoning off a
portion for all the outstanding debts, leaving your family with lesser.

Not Just for Muslims


Islamic credit cards are not speci cally made for those who are of
Muslim faith. In fact, anyone can apply for an Islamic card and enjoy all
the great bene ts.

Even if you would like to use it to kick a bad habit, taking up an Islamic
credit card could help to steer you away from those bars after work,
since it will not be accepted there.
On a more practical note, it provides you with non-compounding interest
for all your balances being carried forward and you can sleep peacefully
knowing that any of your outstanding balances will be taken cared of,
should your health suffer.

If you are unsure which credit card is best for your needs, head on over
to our Islamic credit card page and choose one from all the different
cards available.

2 comments
Agree or disagree with this post? Questions? You also have your word!

Iskandar @ June 7, 2017 at 13:35


^
When the bank '...the Islamic credit cards charge a fee or pro t rate instead.?
'...no compounding interest or fees incurred on outstanding balances.' <- so how bank charge
a fee or pro t rate?
Reply

@ June 15, 2017 at 13:02


RinggitPlus
^
They do charge, it's just that it's not compounding
Reply

Write your comment...

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