sharia credit card

freda11

How does the sharia credit card/loans/mortgages work if Islam forbids interest to be charged? Are tney only available to Muslims? I quite like the idea of an interest free loan etc.....

level200

Wouldnt it be racist to only allow it for Muslims?

bengal-stripe

freda11 wrote: »

How does the sharia credit card/loans/mortgages work if Islam forbids interest to be charged? Are tney only available to Muslims? I quite like the idea of an interest free loan etc.....

Google is your friend!

At present there is no Islamic finance institute which provides an 'Islamic Credit Card' in the UK. (Although, that is not to say that thee will not be one in the future).

http://www.islamicmortgages.co.uk/index.php?id=76

Eonel

I only have a limited understanding of Islamic finance, but as I do understand it charges for finance through fees rather than interest. You will still pay back more than you "borrowed".

AirlieBird

level200 wrote: »

Wouldnt it be racist to only allow it for Muslims?

Islam isn't a race.

GLA-LHR

level200 wrote: »

Wouldnt it be racist to only allow it for Muslims?

Discriminatory certainly, but I can't see how it could possibly be racist.

Hydromancer

The products are open to all. Islamic credit cards are not offered in the UK...in countries that they are offered in, mainly Malaysia, Middle-East etc. they're a bit like secured credit cards combined with a fixed monthly/annual fee.

Islamic mortgages or "home purchase plans" are offered in the UK by HSBC and Islamic Bank of Britain as well as some other niche lenders. Your monthly payment is made up of two parts:

1) you pay the bank a part of the original purchase price which increases your "share" in the home
2) you pay the bank for 'renting' the property out to you. This is basically an interest rate as it normally calculated using the Bank of England base rate.

However, Islamic current accounts are offered by both Lloyds and HSBC among others. There is either no overdraft or with some Lloyds accounts (I think) an interest-free overdraft. The money is invested in Shariah-compliant investments, basically not in gambling, alcohol, tobacco, weapons, pornography or financial services etc. Most of the investment according to HSBC is done in the oil, software and pharmaceutical industries

the_insider

Hydromancer wrote: »

To be honest, I reckon it's just making money by exploiting people's religious beliefs.

How do you figure it's exploitation? By your own account, the 'interest' applied is based on the BoE base rate, the same as any other financial product offered in the Retail sector.

Hydromancer

the_insider wrote: »

How do you figure it's exploitation? By your own account, the 'interest' applied is based on the BoE base rate, the same as any other financial product offered in the Retail sector.

You end up paying more on less favourable terms and there are few options to compare it with because of the term "Islamic"...exploitation is a strong word I suppose...I think misleading is more appropriate. Basically they're charging an interest but not calling it interest.

jonesMUFCforever

I think in this case it was OP trying to exploit what she thought was interest free finance.

Fiddlestick

Hydromancer wrote: »

You end up paying more on less favourable terms and there are few options to compare it with because of the term "Islamic"...exploitation is a strong word I suppose...I think misleading is more appropriate. Basically they're charging an interest but not calling it interest.

It's not the bank's fault that their customer has a religeous belief that prohibits the charging of interest.

They have done their best to create a compatible product within the framework of the customer's religeon and if that's not good enough, the customer is entirely free to set up their own bank that is.