Is it permissible to take out financial products (debit card or credit card) that rewards you for using the product. For example, I have a credit card which I pay off in full every month, but I can collect air miles or cashback just for using the card. I pay a fee for this card also. Is this ok?
Wa alaykum salaam,
It is permissible to receive the points and incentives from the credit card. In a credit card, you are the borrower and not the lender. The borrower is permitted to receive bonuses and incentives, not the lender.
Allah knows best
Salams. AH JZ for confirming. To ask a follow on. I have a Blue bank account with Barclays which means if I pay £4 a month, I get £8 back. Is this money also halal?
Wa alaykum salaam,
No, that particular product is not Shariah compliant.
Allah knows best
JZ - that’s interesting. Can’t you explain (for my understanding) why cashback linked to credit card spend is ok but not cashback linked to a current account? JZ
Cashback linked to account usually requires a fixed amount of deposit, where you are a lender and are receiving benefits in lieu of your deposit. That falls under Riba.
In a credit card, you are the borrower and not the lender. A borrower can receive benefits from the lender as that is not Riba. However, you should only use a 0% credit card where no interest is charged. Of course, many such benefits linked to credit cards are there to encourage you borrow more money with the hope from the credit card company that you default. Therefore, you should only use such credit cards if you are sure that you will not default.
Allah knows best
That’s fascinatingly to consider it in that way JZ. As I have accumulated funds through my debit account, can I donate this as Lillah? Do I deduct the cost of the account (for example, if I pay £4 for the account and get £9 back, do I donate £5 to charity or the whole £9)?
You should donate this as purification and Riba in which ever charity you decide to pay to.
You can donate £5 per month.