Credit cards from the Islamic legal perspective : special reference to Malaysia

Abstract

The importance of credit cards in contemporary society and the need to use them is no doubt becomes a matter of necessity in many circumstances. To show their importance, the study first of all, discusses the development of credit cards, their advantages and disadvantages. The study at the same time is trying to explain the contracting parties involved in the credit cards transactions, their relationship between one another and their responsibilities in carrying out credit cards activities. Furthermore, the study looks into the discussion of credit cards from the Islamic point of views. The discussion starts with discourse amongst the Muslim jurists concerning the freedom of the contracting parties to the contract stipulating conditions in their agreement and follows by the explanation on the conditions those are recognized by Islamic law and those are not. After that, the study deals with the conditions of credit cards that are valid Islamically and that are null and void in which they should not be stipulated in the credit cards agreement by all means. In addition, the adaptation of credit cards to the recognized contracts of Islamic law is discussed and the study seems to indicate that the best way of adaptation is to adapt a combination of principles of aqd al-iqrad, al-kafalah and al-wakalah as the principles applicable to credit cards transactions. Since the study is conducted in Malaysia, it also analyses the Islamic credit cards issued by bank in this country that their issuance rely on bay al-inah despite its controversy on its recognition. Therefore, to avoid such thing the study suggests that the current practice in Malaysia should be replaced by a real debit card or ijarah card.