Navigating the Halal Highway: Choosing the right Islamic credit card

Let's be real. In today's world, credit cards can feel like an extension of ourselves.

Why not bring the essential Baju Kurung this Eid?

credit card.

Need to stock up on Tariq for your next family gathering?

However, our Muslim brothers and sisters need to consider another aspect: compliance with the principles of Sharia law.

That's where Islamic credit cards come in, offering a way to manage your finances while adhering to your faith.

Now, before you head straight to sign up for the first shiny card you see, there are a few things you should know.

Consider this your personal guide to the world of Islamic credit cards.

Understand the profit motive (not interest!)

First of all, Islamic credit cards are free of interest.

Since usury is prohibited in Islam, these cards operate on a profit-sharing basis.

Think of it this way.

When you borrow money from a bank (for example, when you buy something with your card), the bank charges you a predetermined rate of return instead of interest.

This rate typically ranges from 15% to 18% per year, but some cards offer lower interest rates for responsible spenders with a good repayment history.

Minimum Payout: Don't Get Stuck in Quicksand

Similar to traditional credit cards, Islamic cards have minimum monthly payments.

Usually around 5% of the outstanding balance or a minimum of RM50.

Missing these payments can be a double whammy:

Not only will your balance be repaid at a higher rate, but you'll also be hit with late payment penalties.

Beyond money: Benefits of Islamic credit cards

One of the best things about Islamic credit cards is the additional benefits they offer.

Many cards offer Takaful protection, which is essentially Islamic insurance.

Should something happen to you, Takaful will cover your outstanding balance and provide peace of mind to your family.

Additionally, some cards make it easier to pay Zakat (religious alms), which is another burden on your shoulders.

Find your perfect Islamic credit card

Just as baju kurungs come in a variety of styles and colors, Islamic credit cards also offer a variety of features to suit your spending habits.

Here is an overview of the most common types.

Premium Cards For high rollers, these cards offer special perks and travel perks.

Points and Cash Back Cards: Earn points and discounts on your purchases. Perfect for the savvy shopper who appreciates a bargain.

Low Profit Margin Cards: As the name suggests, these cards prioritize maintaining low profit margins. Perfect if you're a disciplined spender and pay off your balance in full each month.

Cross the Miles Card: Tell Miles for these dream vacations in the next sage or Istanbul.

Essence reward: To be honest, filling the tank has a rise in the wallet.

Bonus Dining Card: Foodies rejoice! You can get perks when you go to restaurants.

Bonus Card with Purchase: Get discounts and cashback at your favourite stores.

Follow the Sharia Law Compass

Islamic credit cards are based on agreements that comply with Islamic law.

Below are some important concepts you may come across.

Ujrah: This is translated as "payment" or "salary". Essentially, the redemption rate you pay is considered a fee for the bank's services and benefits you receive with your card.

Tawarruq: This is a fancy term for deferred payment sales. Banks essentially buy products, sell them to you at a slightly higher price, and allow you to "own" them before paying for them.

Ta`widh: If you fail to meet the minimum payment deadline, you may be charged a compensation fee of ta’widh.

Conclusion: Use Islamic credit cards wisely

Remember, an Islamic credit card can be a powerful tool, just like a sharp knife when making rendang.

When used responsibly, it can help you manage your finances and make big purchases.

However, just like this knife, if used carelessly, it can be financially disadvantageous.

So, do your research, compare cards, and choose the one that fits your spending habits.

Above all, remember to pay your membership fees on time to avoid additional costs and maintain low profit margins.

Now reach your financial goals in a halal way!

Confused about Islamic Credit Cards?

Fret not! This guide unravels everything you need to know: profit rates, minimum repayments, bonus features & popular card types (travel miles, anyone?) Learn about Sharia-compliant financing & pick the perfect card for your spending style. Swipe right for financial wellbeing the halal way! #IslamicFinance #CreditCards