Sharīʿah-Compliant Credit Cards: An Analysis of Underlying Structures

Abstract

The purpose of this paper is to provide an analysis of various structures retail clients today. The paper discusses case studies from several jurisdictions to show that various Sharīʿah-compliant contracts or combinations of contracts are being used to structure Islamic credit cards so that customers enjoy similar benefits to those derived from conventional credit cards. It is submitted that Sharīʿah-compliant credit cards which encourage excessive spending (isrāf) should not be promoted on the basis that they counter the basic Sharīʿah principle of moderation and avoiding wastage. Furthermore, the recent financial crises highlighted that the structure of the product will provide little benefits if other factors, such as stringent credit screening processes, need-based analysis and customer’s interests, are ignored or given secondary importance.