Virgin credit card instalment plan halal or haram?

Virgin’s credit card allows you to make a transaction and then you can click on that transaction within 30 days and turn that into an instalment plan which they call 0% interest but with an instalment plan fee.

For example, if you purchase something for £2000 with the credit card, it lets you then convert that into an instalment plan over a length of time from 3 months to 36 months with a fixed monthly amount being taken.

The instalment plan is a higher price than the one off price which they call instalment fee.

For example say the £2000 purchase you convert into a 12 month instalment plan. It adds a fixed instalment fee and so the total cost may therefore be £2080. It then divided it by 12 meaning £173.33 a month.

You know the total cost with the instalment fee plan and the fixed monthly cost. Would this be considered interest or not?

Also does it matter that when you purchase something if it’s direct or not? In this example, if you buy a £2000 product from a company and pay using virgin credit card and then you create instalment plan with your credit card provider instead. So it is sort of indirect. You pay with credit card, credit card provider probably pays company in full and you then pay back credit company instalment plan with fixed instalment costs (purchase price+ instalment fee). As opposed to buying product from company with your debit card driectly or setting up an instalment plan with the company directly.

May Allah bless you.

When a seller offers both a spot price and an instalment plan with additional charges, scholars are divided on whether the added cost in the instalment plan qualifies as interest. Some argue that the markup is simply part of the price and therefore permissible, while others view it as interest, making it non-compliant with Shariah law.

However, in your specific case with Virgin, the company is not acting as a traditional seller of goods but rather as a credit provider. In this scenario, any extra charges associated with the instalment plan are likely to be considered interest from a Shariah standpoint, making it non-compliant with Islamic financial principles.

And Allah knows best!