Balance transfer fee or another form Interest?

[bao_bihari]

Re: Balance transfer fee or another form Interest?

@smooth_guy

Salaam,

I have a question on the special cheque offer we receive by the credit card companies. Let say if there is 0% interest for balance transfer for 6 months, it seems like a good deal to pay off other debts/credit cards/line of credit to avoid interest.

However the catch is that there is a balance transfer fee of 1% of the amount you transfer. Does it fall under interest or its a ‘service fee’ according to Islamic ruling. The reason I am asking is that normally in Islamic financing, the ruling goes by the terminology. For any profit or lending fee that says this much ‘interest’ will be paid to you as profit, or you should pay as borrowing cost then it becomes Ribaa.

Or it doesn’t matter if its a service fee or Interest, when there is a fixed % involved in a transaction, its considered Ribaa ?

What is your relation ship with this company? the company has offered you a loan to pay off your previous loan, and there is a hadith

Every loan that attracts a benefit/advantage is *riba - *Referance- taken from writing of Shaikh Taqi Usmani

then in this case any thing by what ever name you give is RIBA.

@lethal_kamikaze

Peace All,

What I know there no bank which is totally ‘Islamic’ bank. All banks are working on interest either collecting it by saying service fee or else.

Mere similarity does not make one thing haram, being in the industry and being one of critiques of Islamic banking i still can not claim about it being haram ,rather it is because overall banking system including fractional reserve system is a dajjali weapon, so we may ask peple o avoid anking channels if they could , but if they have to use a banking channel then they must use islamic banks, as at maximum there is a difference of opinion on Islamic banking but a unanimous opinion on conventional banking being haram.

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