Best Islamic Current Account?

anon_ymous

In relation to this thread:
https://forums.moneysavingexpert.com/discussion/comment/55517661#Comment_55517661

I have a bank account at Lloyds, which I'll transfer the majority of my money in to an IBB saving account in 6 months time when I apply online (I've applied for two credit cards and two banks recently)

But I was also wondering about who it'd be best for me to bank with? The names that come to mind are IBB, HSBC and Lloyds. HSBC and Lloyds are banks that I can get easy access to and I'm not quite sure about what bank would be best for me to go to any way. Again, I currently bank at Lloyds

callum9999

Considering none of them really pay interest anymore, surely normal current accounts are good enough for Muslims nowadays?

Not that I know much about this area considering I think it's one of the most ludicrous rules any religion on the planet follows. Particularly when many of them go to great lengths to sidestep around the rules and do something which is virtually the same as paying/receiving interest in all but name!

Gromitt

callum9999 wrote: »

Considering none of them really pay interest anymore, surely normal current accounts are good enough for Muslims nowadays?

Nope, as typical normal current accounts require interest on overdrafts, which is not allowed under Sharia law. Some banks get around this by blocking the payment and then charging a 'returned item fee'.

JuicyJesus

callum9999 wrote: »

Considering none of them really pay interest anymore, surely normal current accounts are good enough for Muslims nowadays?

Not necessarily. The funds held in those accounts are used to generate interest for the bank, which is not allowed under Sharia.

It's my understanding that the HSBC and Lloyds accounts hold funds held in their Sharia-compliant accounts separately, so they are not used to generate interest.

jjlandlord

waqasahmed wrote: »

(I've applied for two credit cards and two banks recently)

So... Does this mean islamic credit cards do not charge interests? Or is it just that they manage to bend the rules so much as to charge 'non-interests'?

waqasahmed wrote: »

Some banks get around this by blocking the payment and then charging a 'returned item fee'.

Imo, an example of charging interests without admitting to charging interests...

callum9999

JuicyJesus wrote: »

Not necessarily. The funds held in those accounts are used to generate interest for the bank, which is not allowed under Sharia.

It's my understanding that the HSBC and Lloyds accounts hold funds held in their Sharia-compliant accounts separately, so they are not used to generate interest.

Ah, I'd never considered that. Does the money not get used to generate revenue at all - or just not used for lending etc?

JuicyJesus

callum9999 wrote: »

Ah, I'd never considered that. Does the money not get used to generate revenue at all - or just not used for lending etc?

HSBC's website says the funds are held separately and not used to generate interest. I'd imagine then that they then wouldn't be lent out. Lloyds' welcome pack for their Islamic account says similarly that it won't be used "for any interest-based or non-Shariah approved activities."

jjlandlord wrote:

So... Does this mean islamic credit cards do not charge interests? Or is it just that they manage to bend the rules so much as to charge 'non-interests'?

If you pay the card off in full, you don't pay interest at all.

As regards other borrowing, one method used for mortgages is where the bank essentially buys the house and rents it to the customer with an "acquisition charge" on top. After 30 years the house is paid for. Sharia finance prohibits making money from money; this does an end run round the prohibition by making money from renting the house instead.

It does have to be said that most Muslims aren't that strict about the banking side of Sharia (or most sides of Sharia, for that matter, similarly to how most Christians ignore some of the more onerous bits of their faith) and will use standard financial services like mortgages and overdrafts and credit cards like everyone else. Some however are, and for these people these products fill a niche.

jjlandlord

JuicyJesus wrote: »

If you pay the card off in full, you don't pay interest at all.

Sure, as for all cards. But what if you don't? Are becoming an indebted sinner?

JuicyJesus wrote: »

As regards other borrowing, one method used for mortgages is where the bank essentially buys the house and rents it to the customer with an "acquisition charge" on top. After 30 years the house is paid for. Sharia finance prohibits making money from money; this does an end run round the prohibition by making money from renting the house instead.

My point exactly: Finding complex way to bypass what's supposed to be forbidden.

Anyway, I'll stop taking the mickey out of this 'religion' thing now...

callum9999

JuicyJesus wrote: »

HSBC's website says the funds are held separately and not used to generate interest. I'd imagine then that they then wouldn't be lent out. Lloyds' welcome pack for their Islamic account says similarly that it won't be used "for any interest-based or non-Shariah approved activities."



If you pay the card off in full, you don't pay interest at all.

As regards other borrowing, one method used for mortgages is where the bank essentially buys the house and rents it to the customer with an "acquisition charge" on top. After 30 years the house is paid for. Sharia finance prohibits making money from money; this does an end run round the prohibition by making money from renting the house instead.

It does have to be said that most Muslims aren't that strict about the banking side of Sharia (or most sides of Sharia, for that matter, similarly to how most Christians ignore some of the more onerous bits of their faith) and will use standard financial services like mortgages and overdrafts and credit cards like everyone else. Some however are, and for these people these products fill a niche.

Yes it specifies interest, but it says nothing about using it for investments. That money would then be being used to make more money regardless of whether it's technically interest or not.

Though as I've touched upon before, I find the whole process of using loopholes to get the exact same thing as everyone else but without the "interest" label put on it both laughable and absurd. If God really did say "no interest" etc. - I find it incredibly hard to believe they meant "no interest, but knock yourself out with activities that work just like interest does but has a different name"!

JuicyJesus

callum9999 wrote: »

Though as I've touched upon before, I find the whole process of using loopholes to get the exact same thing as everyone else but without the "interest" label put on it both laughable and absurd. If God really did say "no interest" etc. - I find it incredibly hard to believe they meant "no interest, but knock yourself out with activities that work just like interest does but has a different name"!

That's a fair point. Trust me, I am no particular lover of religion. But if people want to do that, and banks can make a viable business out of people who want to do that, fair enough.