What are Shariah Credit Cards and why should you know about it?

  • authorArvind B
  • 01-05-2022

In India, there are 300+ different credit cards issued by various card issuers. All cards have interest charges associated with them. What if there is a credit card that does not have an interest component?

Shariah Compliant Credit Cards are an alternative to conventional credit cards.

Shariah Compliant Credit Cards are an alternative to conventional credit cards.

Islamic Terminology:

It is essential to know the following terminologies to understand the working of Shariah cards.

  • Shariah is a body of religious law for Muslims on leading an ethical life.
  • Gharar is uncertainty or unnecessary risk.
  • Riba is the interest rate generated from credit and loan products.
  • Takaful coverage is Islamic insurance wherein members contribute money into a pool system to guarantee each other.
  • Zakat is the act of donating a certain portion of wealth to charity.
  • Haram is an act that is prohibited or banned under Islamic law.

Shariah Credit Cards:

Shariah credit cards work like any other standard credit card. The working and the functionalities remain the same except for the interest rates charged on the card. These cards were created and designed based on the Shariah laws of Islam.

According to the Shariah laws, Muslims are prohibited from using credit cards as they charge interest rates. Apart from credit cards, they are also forbidden to use any product that involves Riba and Gharar (which are considered Haram).

Shariah cards are purely based on faith. The stringent followers of Islam are predisposed toward Shariah cards as it is compliant with the Shariah laws they follow in their everyday life.

Features of Shariah Credit Cards:

  • Interest rate: Not levied for using this card.
  • Takaful Coverage: Provided to the cardholders.
  • Transactions Restrictions: Alcohol, tobacco, pork, gambling, and other items prohibited under Shariah laws.
  • Zakat Payment: Late payment fees and other charges are made as Zakat.
  • Late payment fees: Fixed amount + 3% of the outstanding amount donated to a charity.

Shariah Cards in India:

Shariah credit cards are yet to be introduced in India. The Reserve Bank of India (RBI) has been following the Banking Regulation Act, 1949, which works on charging interest for lending money. Islamic banking does not charge interest for lending money. Considering these factors, RBI decided to not pursue Islamic banking in India.

Shariah Cards in other countries:

Shariah cards are prevalent in Saudi Arabia, Qatar, Turkey, Indonesia, Malaysia, Kuwait, UAE, Bahrain, Pakistan, and countries where Islamic finance is followed. These cards work like any other credit card. Still, instead of charging a fee, the card issuers charge a profit rate based on the remaining balance. If the cardholder misses any payment, they must pay a fine which the card issuer fixes. The card issuers generate sustainable revenue to run the institution without compromising the Shariah laws.


These credit cards are not limited to Muslims. Even people from different faiths can apply for this card. Right now, there is no way to issue an interest-free credit card in India. If Islamic banking aligns with RBI guidelines, there may be a possibility of introducing these cards.