What is the ruling on credit cards (Visa cards) issued by Islamic banks, where no interest is charged for late payment, but only a fixed annual fee for the service?

It is permissible to use credit cards that are free from Sharia prohibitions, such as calculating interest on late payments or taking a percentage on cash withdrawals, as this falls under prohibited usury (riba). However, the fixed fees charged by the bank upon issuance or renewal in exchange for services provided are permissible.

A resolution was issued by the Islamic Fiqh Academy clarifying the ruling on uncovered credit cards, stating the following: 1. It is not permissible to issue or use the card if it stipulates a usurious increase. 2. It is permissible to issue the card if it does not include usurious conditions. This entails: a. The permissibility of charging fixed fees upon issuance or renewal for services. b. The permissibility of the bank taking a commission from the merchant, provided that the selling price with the card is the same as the cash selling price. 3. Cash withdrawal is permissible according to Sharia if it does not result in a usurious increase, and fixed fees associated with the service are not considered usury. 4. It is not permissible to purchase gold, silver, and currencies with an uncovered card.