[costamarianavia]

Asalamualaykum brothers and sisters

I really need to know the definitive and correct answer to this question, as my google searches has led me to some confusion due to all the different opinions..

My bank (uk) - namely Halifax - provides me with what they clearly state on my bank statment as an INTEREST FREE overdraft of a thousand pounds .. however they state that if I opted to use this overdraft facility, regardless of how much I borrow, I will incur a service charge of £1 a day for using this facility..

e.g if I go overdrawn by five pounds for 7 days , they will charge me a service fee of seven pounds with no interest

e.g if I go overdrawn by five hundered pounds for 7 days, they will charge me a service fee of seven pounds with no interest

You get my point.. so the service fee is £1 a day for each day Im overdrawn

NOW MY QUESTIONS ARE........

Is this service fee a cloaked up word for RIBAA (interest) thus making this overdraft facility haraam for me to benefit from ? or becuased its a fixed service fee, clearly outlined for using this facility, makes this overdraft facility permissible in the eyes of allah, so I can use this without guilt and fear of sin.

I did some googling and saw a question answered by Mufti Ebrahim desai, who said that credit cards with a service fee is permissible to use..

see here - http://www.islam.tc/cgi-bin/askimam/...11782&act=view

also I read on other websites, there is islamic banking setup in muslim countries like Iran and Pakistan, where the accounts provide overdraft facilities with service fees and abolishing interest..

on the flipside, I see some people saying , service fees on overdrafts is a disguised form of ribaa, as you are paying more that what you are borrowing

CONFUSED !!

What is the correct answer ?

What are your views

I would love to hear from alims / muftisahebs on this one..

If this facility is deemed halal for me, this will be brilliant news as I tend to run out of money few days before I get my salary so would be ideal to tie me over till pay day !

jazakallah khair - May Allah saw guide us.. ameen

[costamarianavia]

Bump

[costamarianavia]

Plss can someone shed some light to this question

[TaxSheemaSter]

Bismillah

I really hope your post doesn't go unnoticed this time and muftis or ulema of this forum will pay heed to answer your questions soon inshaaAllah

[inilbowly]

Inshallah, I hope a scholar answers this soon.

I'll just give my thoughts based on my economics knowledge (not islamic). Classically Interest means a rent on money, it is not a rent on anything else. For example, I may rent £1,000 for £50 per year. That would be considered a loan of £1,000 with interest of 5%. Now if I was to rent say a fridge worth £1,000 for £50. Would that be considered 'interest'? In non-islamic (i'm only emphasising this to show i do not know the answer islamically) economics it wouldnt. it would be considered rent and not interest. Why? Because you are renting an object/service and not money itself.
Let me give you another example. Imagine you have a mortgage on a £100k house. What are you paying interest on? The amount of money you borrowed. Imagine instead you live in a £100k house and you pay money to someone to live there. Is that considered rent or interest? Normally most people would say rent because your paying money for a physical service/object and not on money.

Now in this case, this £1 fee appears to be a rent on a service. It is not related to the amount of money you borrow. if you considered it was, it would be infinitely variable. For example, if you borrowed £1, then if you consider the service fee of £1 to be interest, than daily interest rates would be 100%. if you borrowed £1,000 than your daily interest rate would be 0.1%. Interest doesn't work like that. It is calculated as a fixed ratio of amount of money borrowed, that's why interest is always seen as a % sign.

Allah Knows Best. I hope Inshallah you get a response here because it would increase our knowledge also of this important topic. Otherwise have you checked Sunnipath, your imam etc?