Malaysian Malay women and their credit cards!

A few concerned Malaysian Malay Muslim sisters (Muslimah) recently had asked me to highlight their concerns on the rising number of our young Malaysian Malay women (wanita Melayu) who were debt ridden with uncontrollable debts due to their excessive use of conventional credit cards. They also said that the numbers of Malaysian Malay women who have been declared bankrupts because of their failures to properly manage their conventional credit cards spending are also on the sharp rise.

Sure, I would feature their concerns here today but I do realize that there is nothing much that I can do to help solve the problems that they have raised as mentioned earlier. I am not going to waste my time asking our National Bank (Bank Negara) to share their thoughts on the matter for I very well know that they would never entertain my request.

Yes, this whole issue with regards to the usage of conventional credit cards among our Malaysian Malay women has certainly raised some questions. I do notice that some of our Malaysian Malay women especially those who are young and yuppie have this crazy habit of applying for many credit cards. They love to show off or flaunt their enormous collections of credit cards to friends and families as if those credit cards are some kind of jewelries and female accessories! No you naive ladies; credit cards are not some kind of luxury. They are not jewelries and they are certainly not your accessories either. They are just another form of stupid marketing tricks disguised under some silly trends and fashions to trick you into taking on more debts. Hmm… Rockefeller would be pissed with this posting of mine. :-) Anyway, do you get it, debts! This is another great equation that the so called great Albert Einstein has missed. It is:

Conventional credit cards are all about:
HUTANG (Debts) – ($ (Payment) + Interests (Riba)) = You are dead meat!

I tried to look for some Islamic guidelines on the use of conventional credit cards over at IslamOnline Dot Net and IslamOnline Dot Com and their guidelines were quite clear.

IslamOnline Dot Net said, quote:
“Dear brother in Islam, we would like to thank you for the great confidence you place in us, and we implore Allah Almighty to help us serve His cause and render our work for His Sake.

There is nothing un-Islamic in using credit cards as long as one does not delay paying the bills and pays the total amount on time. It is indeed haram to pay interest. However, one is allowed to use the credit cards to charge the amount that one can pay when the bill comes. But if one uses the card to borrow money on interest or to purchase what one cannot pay on time, then one is indulging in riba, which is forbidden in Islam.

In his response to your question, Dr. Monzer Kahf, a prominent economist and counselor states:

“1. The opponents of credit cards found their view on the basis that it is an interest-based loan contract; consequently, it is haram on the ground that it is riba. There is no doubt that issuing such an interest-based credit card is not permitted for any Islamic/Muslim financial institution. On that basis, Islamic banks issue credit cards that are not interest-based. Essentially, the bank withholds from your account an amount as a guarantee for the payment at the end of the grace period of the card, and each month, if your current account permits it, the credit card charges will be deducted from the current account; otherwise, the amount withheld will be reduced by the amount you owe on the credit card, and you will be asked to replenish the amount withheld. Islamic banks do not really benefit from the card itself, and they provide it as a service to their valued customers. However, they benefit from the mudarabah deposit withheld as a guarantee.

This is also the essence of the Organization of the Islamic Conference resolution on credit cards that came in the year 1999 or 2000.

2. The proponents of the permissibility of using interest-based credit cards found their view on the following:

a. While it is true that issuing interest-based credit cards by Muslims is not permissible, accepting them by Muslims is permissible because they give a choice to the consumer of either going interest-based or settling within the grace period without any interest. The contract is not a loan contract; it is rather a prior acceptance of hawalah or it is kafalah by the issuer of amount charged by the user.

b. The permissibility of signing a credit card contract and using it is conditional on two points: 1) that the user is keen and able to pay within the grace period; 2) the user will not withdraw cash (because cash withdrawal generates interest from the day of withdrawal and does not have a grace period).

In other words, permissibility is conditional on not invoking the interest clause in the credit card agreement or by using the credit card as a free rider.

3. The permissibility is not based on Muslim/non-Muslim country, nor on need for the interest-based credit cards. Many people can live without them, but they provide considerable convenience for Muslims who live in a twenty-first century society. (Please notice that all opponents of credit cards do not live in our time; they are still living in the fourteenth and fifteenth closed economy century.)

Note that the annual fee on credit cards is permissible and is practiced by many Islamic banks.”

IslamOnline Dot Com meanwhile said, quote:
“Praise be to Allah. What you have heard about credit cards being haram is correct. Using them is haram even if the user is certain that he will pay the bank within the time limit. It has already been explained in the answer to the question mentioned that they are haram because the bank lends money to the user in return for interest, and this interest is the price of the annual subscription to the credit card, as well as other interest charges which are to be paid to the bank if the user is late in paying. The cost of the card is a kind of riba which the user pays to the bank, and this riba is paid by the user whether he pays on time or not. Also, the user enters into a contract with the bank which means that he is obliged to pay interest if he delays payment. This is also haram, because it is not permissible for a Muslim to commit himself to doing something that Allah has forbidden. The user may think that he can pay up on time, but then something happens to him that prevents him from doing so, so he pays riba to the bank. Shaykh Ibn ? Uthaymeen (may Allah have mercy on him) said concerning this kind of contract: A contract of this type is not permissible, because it involves riba which is the price of the card, and it also means committing to pay interest if payment is delayed. In another fatwa he said: This transaction is haram, because the one who enters into it commits himself to paying riba if he does not pay on time. This is an invalid commitment, even if he believes or thinks it most likely that he will pay it before the time is up, because circumstances may change and he may not be able to pay it off. This is a matter that is in the future, and no one knows what will happen to him in the future. So dealings of this type are haram. And Allah knows best.”

I will forward this matter to our Religious Departments some time soon and hopefully they would be able to provide us with some kind of explanation in the near future. Stay tuned, folks!

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