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Fatwa CenterRuling on credit cards that do not charge Riba for fixed period
Question
Assalamu Alaikum, I have a question regarding credit cards contracts that do not charge interest if you use them during the first 12 months. I have previously asked this question and was referred to other fatwas regarding buying "products (like cars)" and I feel I need to elaborate more about my reasoning for getting intro-0% interest credit card : I already have some students loans which unfortunately charge interest and I'm planning to pay them off as soon as possible to rid myself of this haram interest, if I do get a credit card with introductory 0% interest rate, I would be able to transfer large portion of my student loan to the credit card and avoid paying interest on them, I would then pay my credit card issuer a monthly payment and pay off the debt in 12 months, and also in addition I would still have to make monthly payments for the student loan lender to pay off for the remaining balance. However, this way I will have significantly decreased the amount of interest I pay. In such case, do you think it is permissible to apply for the credit card to minimize the interest I pay? Thank you and may Allah reward you for this great service,
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His Slave and Messenger.
The fact that the credit card which you mentioned is exempt from interest during a certain period, but its holder is obliged to pay interest after the expiration of the grace period, then this does not make it lawful to deal with it as the condition of Riba (usurious interest) still exists. Accordingly, it is forbidden to enter a prohibited contract without a necessity, and the purpose of decreasing the interest of your student loan is not considered a necessity that allows entering into such a prohibited transaction. Also, this is not a solution to the problem; rather, this may aggravate it. The only solution is in being committed to do what is lawful and avoid what is forbidden and repent from it.
The decision of the International Islamic Fiqh Academy No.108 (2/12) regarding credit cards states: “It is not permissible to issue a non-covered credit card or to use it if it is stipulated in it that Riba interest is to be paid, even if the one who requests the card is determined to pay it off within the free grace period.”
Besides, the two Fataawa which we referred you to, 88473 and 98959, clarify the prohibition of entering into any usurious contract in principle, even if it is with the intention of repaying before the maturity date of the interest rates. One of these two Fataawa gave an example of a bank that gives a car loan with a grace period of 36 months on the condition that the bank deserves the interest thereafter. This is similar to the contract of the credit card that you mentioned in terms that the contract includes a grace period from interest and then it demands the card holder to pay interest after the expiry of that period; so it is a forbidden Riba-based contract.
Allaah Knows best.
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