What is an Islamic credit card?
Just like a conventional banking card, Islamic credit cards also allow you to make upfront purchases and pay for all of it on a later date. However, Islamic credit cards in Malaysia function on different fundamentals than conventional banking cards do. An Islamic card is a Shariah compliant credit card and therefore limits purchases to halal transactions only.
In most cases, this would relate to the food and beverage industry. Bars and restaurants that serve alcohol or any form of non-halal eateries will not accept an Islamic credit card.
How an Islamic credit card works in Malaysia
Like all credit cards, you make payments upon the stipulated statement date. However, if you surpass the deadline or do not cover the full amount, the credit card company does not charge you interest for Islamic credit cards. It instead charges a fee or what is called a profit rate on the remaining balance.
This is because it is against Islam to impose interest, which is known as riba. That does not mean there are no charges involved. To counter that, the Islamic credit cards charge a fee or profit rate instead.
Another concept that it uses is Ujrah where a payment is made in exchanged for services, benefits and privileges that are being offered to the cardholders.
Find out what is the best Islamic credit card Malaysia offers with our comparison tool. And remember, Islamic credit cards are open to those from all faiths!