The primary role of a Qard al-Hasan credit card is to offer a credit facility that aligns with Islamic financial principles. It provides Muslims, and even non-Muslims interested in ethical financing, an option to access credit without incurring interest, which is prohibited in Islam. By doing so, it bridges the gap between modern financial needs and religious compliance.
Qard Al Hasan credit card aims to facilitate the cardholder's immediate financial needs, allowing them to make purchases and pay for them later. Any fees or penalties collected, instead of being utilized for profit, might often be directed towards charitable or community welfare activities, ensuring that the financial operations benefit the community at large.
Principles and Mechanism of a Qard al-Hasan Credit Card
1. Prohibition of Riba (Interest): A Qard al-Hasan credit card operates without charging or accruing any interest on borrowed amounts, adhering to the Islamic prohibition of riba.
2. Benevolence: The term "Qard al-Hasan" translates to "benevolent loan," emphasizing that the loan's nature should be based on goodwill rather than profit-seeking.
3. Ethical Financing: The card operates in line with Islamic principles of justice, fairness, and transparency, ensuring that cardholders aren't exploited.
4. Clear and Transparent Terms: Any fees, charges, or terms associated with the card should be clear, upfront, and free from gharar (excessive uncertainty).
1. Credit Facility: Cardholders are given a credit limit, up to which they can make purchases or withdraw funds without incurring interest.
2. Repayment: The cardholder is obligated to repay only the principal amount used, without any additional charges, within the stipulated billing cycle.
3. Permissible Fees: Instead of interest, the bank might charge certain permissible fees or service charges. These charges are not profit-driven and must be justified (e.g., covering administrative costs).
4. Late Payment: While interest cannot be charged on late payments, there might be a fixed late payment fee. In line with Islamic principles, such fees are often channeled to charitable causes rather than serving as a profit source for the bank.
5. Shariah-Compliance: The operations, features, and even the rewards or benefits of a Qard al-Hasan credit card are monitored and audited by a Shariah board or committee to ensure continuous compliance with Islamic laws.
In essence, a Qard al-Hasan credit card offers an interest-free credit facility while adhering strictly to the ethical and moral guidelines of Islamic finance.