In Malaysia the published answer is clear: a conventional credit card is haram to sign up for and use, even if you pay the full statement balance every month and never incur a sen of interest. The Federal Territories Mufti (Al-Kafi #2037), JAKIM's e-Muamalat desk and the Selangor Mufti's e-Musykil service all reach that conclusion, because the card agreement itself contains a stipulated interest clause and that stipulation is riba whether or not it is triggered. The halal alternative is an Islamic credit card-i, which every major bank issues under a Tawarruq or Ujrah contract. Our is-it-halal hub covers the wider rulings; this article reads the actual fatwa texts and the current contracts.
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What the Federal Territories Mufti ruled on cards paid in full
Al-Kafi #2037 from Pejabat Mufti Wilayah Persekutuan answers the exact question most people type: can I use a conventional credit card if I pay in full each month so I am never charged interest (faedah)? The ruling (hukum) is haram, and the reasoning is contractual. When you accept a conventional card you agree to terms that include a condition of riba on any balance not settled within the grace period. In fiqh terms this is riba nasi'ah in debt, an addition demanded in exchange for deferral, and agreeing to a contract that contains it is itself the problem, whether or not the clause is ever activated.
The Mufti's office acknowledges that contemporary scholars are split. It cites Dr Muhammad Ali Elgari and the International Islamic Fiqh Academy (Majma' al-Fiqh al-Islami al-Duwali) for the prohibition, and Dr Abdul Sattar Abu Ghuddah for the view that a contract with a void riba condition is valid while the condition itself is void. The Malaysian office then rejects the permissive view for Malaysia on a specific ground: the riba condition still operates in law and will still be enforced if you slip, and there is no necessity (darurah) argument when Bank Islam, Maybank Islamic, CIMB Islamic, RHB Islamic and others all issue Shariah-compliant cards.
Where JAKIM and the Selangor Mufti's office stand
JAKIM's e-Muamalat portal takes the same line and extends it: using conventional banking products is haram because of riba, gharar and gambling elements, so promoting a conventional card is haram too. On late payment charges it distinguishes ta'widh (compensation for actual loss, permitted) from interest-style penalties that reward the lender for delay, a distinction Bank Negara Malaysia (BNM) has since written into its credit card-i rules.
The Selangor Mufti's e-Musykil question-and-answer archive carries two relevant answers. One quotes the 32nd Muzakarah of the National Fatwa Committee (10 to 11 June 1993): bank loans are haram except under compulsion for pressing basic needs, keeping money in a bank without taking the interest is permissible, and interest received must go to Baitulmal. The second answers a cardholder who pays on time and receives roughly RM30 cashback a month on a conventional card: the card and all dealings tied to it should be avoided because of riba, the cashback is haram, and the same cashback on an Islamic card is halal because the underlying contract is compliant. Our guide to switching from conventional to Islamic banking covers what to do with interest or rewards already received.
The minority view, and why it does not travel well to Malaysia
Outside Malaysia some scholars permit a conventional card for someone who always clears the balance, reasoning that the cardholder never pays or receives riba and that a void clause does not void the whole contract. Where no Islamic card exists, that view carries weight. Malaysia's fatwa bodies set it aside for Malaysia on three stated grounds: the contract still contains riba, the clause has legal force the moment you miss a payment, and almost every bank here issues an Islamic card, which removes the necessity argument.
- Contract test: a conventional card agreement contains an interest clause; an Islamic card agreement does not, so the first fails even for a disciplined payer.
- Enforcement test: one late payment on a conventional card triggers interest you have already agreed to; the same event on a card-i triggers capped profit or fee plus a non-compounding late charge that must reflect actual cost.
- Necessity test: Malaysian muftis treat darurah as absent because Islamic cards are widely available, which is why foreign permissive views are set aside here.
- Rewards test: the Selangor Mufti's office treats cashback from a conventional card as haram and cashback from an Islamic card as halal, following the contract rather than the money.
What actually differs inside an Islamic credit card-i
A credit card-i is not a conventional card with the word interest replaced by profit. BNM's Shariah Advisory Council (SAC) approved the Ujrah-based card at its 77th and 78th meetings on 3 July and 30 July 2008. Under that structure the card is a qard (credit facility) and the bank charges ujrah (a fee) for services, benefits and privileges, not for the loan itself. The second structure, Tawarruq, has the bank sell a commodity to you on deferred payment and then sell it on your behalf for cash; your credit limit is the cash proceeds and you owe the bank the deferred sale price, with ibra' (rebate) for whatever profit is not used. Our Islamic credit cards comparison lists which bank uses which.
The market is moving towards Tawarruq. CIMB Islamic published a notice converting all its credit cards-i and related services from Ujrah to Tawarruq effective 1 January 2026. In July 2026 the SAC issued a statement on both structures that explains why: computing ibra' on the effective ujrah of an outstanding qard debt is not permissible, cash advance fees must reflect the bank's actual direct cost without mark-up, annual fees may differ between card tiers only for bundled benefits and never for cashback or rebates, and ujrah and late payment charges must not be compounded. Tawarruq, where profit arises from a sale, fits those constraints more cleanly.
| Feature | Conventional card | Ujrah credit card-i | Tawarruq credit card-i |
|---|---|---|---|
| Underlying contract | Loan with interest | Qard plus service fee (ujrah) | Deferred commodity sale, cash proceeds as limit |
| What you pay on a carried balance | Interest, tiered 15% to 18% | Ujrah, same tier caps, ibra' for unused fee | Profit, same tier caps, ibra' for unused profit |
| Late payment | Fee, lower of 1% or RM100 | Ta'widh, lower of 1% or RM100, excess to gharamah account | Ta'widh, lower of 1% or RM100, excess to gharamah account |
| Compounding | Charges on carried charges restricted | Not permitted | Not permitted |
| Malaysian fatwa position | Haram even if paid in full | Permitted (SAC 2008) | Permitted (SAC statement 2026) |
What BNM's December 2025 policy document does to both cards
BNM's Credit Card and Credit Card-i policy document, issued 19 December 2025, applies the same consumer rules to both products and adds Shariah-specific requirements for the card-i. The principal cardholder must be at least 21 and earn at least RM24,000 a year. Anyone earning RM36,000 or less may hold cards from at most two issuers, each with a limit of no more than two times monthly income. Minimum monthly repayment is 5% of the outstanding amount plus any instalment plan amounts. Pricing is tiered by behaviour: twelve consecutive on-time minimum payments puts you in Tier I, capped at 1.25% a month (15% a year); ten or more on-time months in a twelve-month cycle is Tier II at 1.42% (17%); everyone else is Tier III at 1.5% (18%). Cash advances are capped at 18% a year on both products.
For the card-i specifically, the issuer may impose profit or fee only on retail and cash withdrawal transactions, must grant ibra' on the unused portion, must place any late payment charge above actual cost in a gharamah (charity) account, and may not compound late charges with monthly profit. The late payment charge is the lower of 1% of the outstanding balance or RM100, with any minimum capped at RM10. Our explainer on BNM's Shariah governance and the SAC describes how these rulings bind every licensed Islamic bank.
What an Islamic card costs in practice: Bank Islam's Platinum card-i
A concrete product shows how the rules land. Bank Islam publishes its Visa Platinum Credit Card-i on a Tawarruq contract with a minimum income of RM36,000 a year, a profit rate of 15% to 18% a year by tier, and an annual fee of RM388 per card, waived for primary and supplementary cards with at least 12 transactions or RM120 of retail spend in the year. Cashback runs at 3% on monthly spend between RM500 and RM1,499.99 and 5% from RM1,500 in selected categories, capped at RM100 per card per month, with 0.2% on other spend above RM500. None of that is more generous than a conventional Platinum card; the point is the contract behind it.
The discipline is the same on either card: pay the full statement balance by standing instruction so the profit tier never matters, and read the product disclosure sheet for the profit rate, annual fee and waiver conditions. A card-i that revolves a balance still costs Tawarruq profit plus a late charge; the money is halal, but it is still yours.
Cashback, points and instalment plans on an Islamic card
On the Selangor Mufti office's reasoning, cashback and points earned on a card-i follow the compliant contract and are halal. The SAC's 2026 statement adds a guardrail for the bank: it may not price its annual fee by the card's monetary benefits, so a Platinum card-i cannot charge more because it pays more cashback; the fee must correspond to the overall bundle of services. Easy payment plans and balance transfers on a card-i are Tawarruq financing with a stated profit, and BNM requires early settlement to be met with ibra' and no penalty. Buy now, pay later schemes are a separate product; our BNPL ruling piece treats those contracts one by one. Debit cards carry no credit and raise no riba question, which is why many Malaysians use an Islamic debit card from their Islamic bank account and skip credit cards entirely.
Already holding a conventional card? A clean exit in five steps
- Apply for a credit card-i first, so standing payments can move before you cancel anything; BNM's two-issuer rule applies if you earn RM36,000 or less, so count your existing cards.
- Clear the conventional balance in full on the next statement; any cashback or interest received should be given away in line with the 1993 National Fatwa Committee decision on bank interest.
- Move recurring debits (telco, streaming, takaful contributions, tolls) to the new card-i and confirm each has taken one successful charge.
- Cancel the conventional card in writing and keep the zero-balance confirmation letter.
- Set a full-statement auto-debit from your Islamic current or savings account to the card-i so the profit tier is never triggered.
Our view
On the question as asked, is a credit card haram, the Malaysian fatwa bodies are unanimous: a conventional card is haram to hold even when paid in full, because the riba is in the contract you accepted and not only in the interest you avoid. The permissive view exists abroad, but every Malaysian authority that has considered it says it does not apply where Islamic cards are available, and here they are available from almost every bank. A Tawarruq or Ujrah credit card-i is permitted by BNM's SAC, priced under the same 15% to 18% tier caps, and carries rewards the Selangor Mufti's office considers halal. The trade-off is small: a card-i is not cheaper and the bank still earns if you revolve a balance. Choose it for the contract and run it as a pay-in-full payment tool. Facts checked against muftiwp.gov.my, e-muamalat.islam.gov.my, muftiselangor.gov.my, bnm.gov.my, cimb.com.my, bankislam.com on 20 September 2026.
Frequently asked questions
Is a credit card haram if I pay the full balance every month?
According to the Federal Territories Mufti's Al-Kafi #2037, yes, a conventional credit card remains haram even when you pay in full every month and never incur interest. The ruling rests on the contract: by accepting the card you agree to a stipulated riba condition on unpaid balances, and agreeing to that condition is prohibited regardless of whether the bank ever applies it. The office directs Malaysians to Islamic credit cards-i instead.
Is an Islamic credit card-i actually halal or just rebranded?
It is a different contract, approved by BNM's Shariah Advisory Council. Ujrah cards combine a qard credit facility with a service fee; Tawarruq cards create a deferred commodity sale whose cash proceeds become your limit, with ibra' for unused profit. BNM's December 2025 policy document adds Shariah-specific rules: profit only on retail and cash withdrawals, no compounding, late charges at actual cost with any excess to charity. Those features do not exist on a conventional card.
Is cashback from a credit card haram?
The Selangor Mufti's e-Musykil answer treats cashback from a conventional card as haram because the card contract involves riba, and cashback from an Islamic card-i as halal because the underlying akad is Shariah-compliant. If you have received cashback or interest on a conventional card, the 1993 National Fatwa Committee decision quoted by Selangor directs that interest-type gains not be used for yourself but channelled to Baitulmal or equivalent charitable purposes.
Why did CIMB Islamic switch its cards from Ujrah to Tawarruq?
CIMB Islamic's notice converts all its credit cards-i from the Ujrah concept to Tawarruq effective 1 January 2026. The timing lines up with a July 2026 SAC statement that rules out computing ibra' on effective ujrah over an outstanding qard debt and tightens cash advance and annual fee rules under Ujrah. Tawarruq generates profit from a sale, which fits BNM's caps and ibra' requirements more naturally, so several issuers have moved that way.
What is the maximum profit rate on an Islamic credit card in Malaysia?
BNM caps the profit or fee on retail balances at 1.25% a month (15% a year) for Tier I cardholders who pay at least the minimum on time for twelve consecutive months, 1.42% a month (17%) for Tier II with ten or more on-time months in a cycle, and 1.5% a month (18%) for Tier III. Cash withdrawals are capped at 18% a year. Those caps are identical for conventional cards; the difference is the contract and the ibra', gharamah and no-compounding rules.
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Who qualifies for a credit card-i under the 2025 BNM rules?
You must be at least 21 and earn at least RM24,000 a year. If you earn RM36,000 or less you can hold cards from no more than two issuers, and each issuer may give you a limit of at most two times your monthly income. Individual banks set higher thresholds for premium cards; Bank Islam's Visa Platinum Credit Card-i, for example, asks for RM36,000 a year. Minimum monthly repayment is 5% of the outstanding balance plus any instalment plan amounts.
