Assalamu Alaikum,
I recently learned that if a bank offers a promotion to give you a certain amount of money on the condition that you sign-up for a new account and deposit a minimum amount of money in it, then this is actually haram as it is interest. There were a few similar scenarios that I wanted to inquire about as to whether they are halal or haram:
1 - if a Shariah compliant fund offers a credit or gift on the condition that we invest a certain amount of money into the fund (a halal mutual fund or income-based mortgage fund)
2 - when signing up for an account at a brokerage, the brokerage offers a credit (either for fees or a certain number of free transactions)
3 - similar to 2), but sometimes if you sign-up through a particular link from an article then you can receive the credit or bonus. I believe in this situation the author of the article also gets commissions.
4 - if I have a Visa credit card through a bank, and I get dividends based on the amount of money I spend
I would just like to know if these constitute riba or if they are halal
JazakAllah khair
Wasalam
May Allah bless you.
1- There are two things here to consider: when the incentive/gift is offered in exchanged of a loan, then this amounts to Riba and therefore it is not halal. AAOFI Standard (49) 3/2
If on the other hand the person receives a gift as the result of her incurring a liability, then it will be permissible for her to receive such gift. AAOFI Standard (49) 3/6
In the scenario you have mentioned, the Shariah compliant fund promises to offer an incentive, in exchange of an investment made by the customer. This incentive is not in lieu of a loan but of a liability incurred by the customer. For that reason such scheme would be shariah compliant.
2- If the broker offers a credit in exchange of a fee, then this would be classified as Riba, and therefore it would not be permissible. The general rule is that a lender cannot benefit from lending money.
However if the loan is given as incentive to use their service i.e. to make a certain number of transaction through their platform, then the incentive received does not amount to Riba.
3- This would be permissible. Because the incentive offered is not in compensation of a loan.
4- It is permissible to receive gifts from a card issuing company. Here the gift is not conditional to a loan but it is an incentive for you to use your card for payment. However the gift offered must be shariah compliant.
In your case, I am not sure if you have shares in a bank and whether you are getting paid extra dividends from those shares.
And Allah knows best!
Assalamu alaikum,
JazakAllah khair for your detailed explanations.
I just wanted to clarify question 2. The scenario is that the online brokerage requires a minimum amount of funds to open an account, but they offer a promotion occasionally that they will waive account fees for a period of time or give a credit on account fees. Other than for some fleeting days when the account is first being opened, the funds provided by the customer are not a loan as they will end up invested in a Shariah-compliant ETF or income fund, and not remain in cash with the brokerage.
However, the brokerage has a monthly fee and they also may charge a fee when purchasing the funds. Is it okay to benefit from these fees being waived or reimbursed as a result of the sign-up promotion?
JazakAllah khair
Yes if the fees is related to the brokering services and the administration of the account, then it would be permissible to benefit from a discount or a reimbursement.
And Allah knows best!