WHAT IS QARD AL-HASAN CREDIT CARD WITH NO RIBA ?
A Qard Al Hasan credit card is a Shariah-compliant card facility based strictly on the principle of Qard Al Hasan (benevolent loan). Under this structure, the issuer provides temporary liquidity to the cardholder without charging interest or profit on the outstanding amount. The cardholder is obligated to repay only the principal amount borrowed.
Qard Al Hasan credit card: structure, zero-profit model and Shariah compliance framework
Understanding a Qard Al Hasan credit card
Core objective of a Qard Al Hasan credit card
The primary objective of a Qard Al Hasan credit card is to offer short-term financial flexibility without generating income from interest or markup. It is designed as a socially responsible Islamic finance tool that prioritizes ethical lending over commercial profit.
How a Qard Al Hasan credit card functions
When a cardholder makes a purchase, the issuer settles the transaction with the merchant. The amount owed by the cardholder is treated strictly as a principal debt without any markup. The cardholder repays the exact amount used within the agreed repayment period.
Step-by-step operational structure
The issuer extends a benevolent loan for each transaction. The statement reflects only the principal used. The borrower repays the full amount by the due date. No profit, markup, or APR is applied under the Qard structure.
What qualifies as a genuine Qard Al Hasan credit card
A true Qard Al Hasan card does not charge any profit, markup, or interest on the borrowed amount. It may charge administrative or service fees strictly limited to covering operational costs, not tied to the amount or duration of debt.
What is NOT considered a Qard Al Hasan credit card
Any credit card charging percentage-based profit, time-based markup, APR, or compounding charges is not Qard Al Hasan. If revenue is generated from the debt itself, the structure no longer qualifies as benevolent lending.
Permissible expenses covered
A Qard Al Hasan credit card may cover groceries, essential utilities, healthcare expenses, school tuition, rent payments (where allowed), halal retail purchases, travel tickets, and emergency expenses.
Non-permissible expenses
Transactions related to gambling, alcohol, adult entertainment, speculative investments, cryptocurrency margin trading, and interest-based financial services are typically restricted under Islamic compliance standards.
Profit or rate application
Under strict Qard Al Hasan principles, the applied profit rate is 0%. No financial return is generated from the principal loan amount.
Administrative and service fees
Issuers may charge fixed administrative fees (for example $10–$100 annually) strictly to cover operational costs such as card issuance, processing, and compliance. These fees must not increase based on the size or duration of the outstanding amount.
Late payment treatment
If payment is delayed, a fixed penalty may be applied solely as a deterrent and often redirected to charity. The issuer cannot treat late penalties as income derived from lending.
Cash withdrawals
Cash access may be limited or subject to administrative fees. No profit margin may be applied to the principal amount withdrawn.
Eligibility conditions
Applicants must meet identity verification requirements, income documentation standards, and pass internal affordability checks. Some issuers may prioritize community membership or cooperative participation.
Shariah governance
Issuers typically operate under Shariah advisory supervision to ensure that no indirect profit mechanism is embedded in the loan structure.
Risk disclosure and transparency
The full repayment schedule, administrative fee structure, and penalty policies must be clearly disclosed. The borrower must understand that the facility is a benevolent loan and not a profit-generating credit product.