Question: Are cashback and rewards from credit cards considered ribā (interest)?
Answer:
بِسْمِ اللَّهِ الرَّحْمَنِ الرَّحِيمِ، الْـحَمْدُ لِلَّهِ رَبِّ الْعَالَمِينَ، وَالصَّلَاةُ وَالسَّلَامُ عَلَى أَشْرَفِ الْأَنْبِيَاءِ وَالْمُرْسَلِينَ، نَبِيِّنَا مُحَمَّدٍ، وَعَلَى آلِهِ وَصَحْبِهِ أَجْمَعِينَ، وَمَنْ تَبِعَهُمْ بِإِحْسَانٍ إِلَى يَوْمِ الدِّينِ.
Conventional credit card agreements usually include a clause allowing the issuer to charge interest (ribā) on late payments. All four madhāhib prohibit entering into contracts that involve interest, even if one intends not to utilize the interest-based clause.
Allah Most High states:
﴿ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ﴾
“Allah has permitted trade and forbidden interest.” (Sūrat al-Baqarah: 275)
However, in circumstances where access to financial services or essential transactions is not possible without a credit card, some contemporary Sharīʿah councils have allowed its use under the condition that the user pays off the full balance before interest is incurred. This is treated under the legal maxim: “Necessities permit the prohibited.”
As for cashback and rewards:
- If a person uses the card within halal limits and repays the full amount before any interest accrues, then the rewards are not considered interest.
- These are viewed as promotional discounts or incentives offered by the company and do not fall under prohibited ribā as long as no haram transaction occurred.
Therefore, the use of credit cards is only tolerated under necessity and strict self-discipline. Rewards such as cashback or points are permissible to accept because they are incentives offered by the company.
وَاللَّهُ أَعْلَمُ.