Islamic credit cards work on the Shariah banking principles. These cards are interest-free cards. There are several banks and financial institutions that offer a range of Islamic credit cards.
With Islamic credit cards you can earn cashback, reward points, takaful, and more; just that these cards can be used for halal transactions only. Let’s take a look at the different benefits of Islamic credit cards and how they can be used to get the maximum benefit.
When it comes to conventional credit cards, most of you would be familiar with what they are and how they work. But, the same can’t be said for Islamic credit cards or the concept of Islamic banking itself.
A majority of Islamic credit cards boast great features, benefits, and rates when compared to conventional cards; and you shouldn’t miss out making the most of them.
Up to 8% cashback.
Up to 8% cashback.
Unlimited 0.2% cashback.
Unlimited 0.2% cashback.
Unlimited 0.2% cashback.(Benefits)
RM240 for principal card.
RM120 for supplementary card.(Annual Fee)
Travel takaful coverage and Rewards(Reward Type)
Personal accident coverage of up to RM100,000.
Flight and Travel Personal Accident coverage of up to RM1 million.
3x and 1x AFFIN Rewards Points for every RM1 on overseas and local transactions respectively.(Benefits)
Waived for the first year. From the second year, RM500 for principal card.
RM400 for supplementary card.(Annual Fee)
Reward Points(Reward Type)
1x points on different transactions, including educational institutions, takaful providers, utilities, petrol and 0% EzyPay.(Benefits)
Waived for life.(Annual Fee)
Reward Points and no mark up rate(Reward Type)
0% mark up rate on overseas transactions with no additional fees for currency exchange.
1 reward point for every RM10 spent.(Benefits)
Waived for life.(Annual Fee)
Cash rebate(Reward Type)
7% cash rebate on expenses at PETRONAS outlets of RM3,000 and above.
3% cash rebate on expenses at PETRONAS outlets of RM3,000 and below.
Unlimited 0.2% cash rebate on other retail expenses.(Benefits)
Waived for life.(Annual Fee)
Reward Points and Golfing Privileges(Reward Type)
Up to 5x Reward Points for dining expenses.
3x Reward Points on overseas retail purchases.
2x Reward Points for utilities, shopping, and takaful expenses.
1x Reward Points on all other retail spends.
No green fee charges for select golf clubs in Malaysia.(Benefits)
RM200 for principal card
Waived for supplementary card.(Annual Fee)
Complimentary lounge access and takaful coverage(Reward Type)
3x complimentary lounge access at airports under the Premium Lounge Network in Malaysia & Singapore.
Up to RM2 million under personal accident coverage
Up to RM100,000 under personal accident takaful.(Benefits)
RM777 for principal card.
RM333 for supplementary card.(Annual Fee)
Reward points and frequent flyer miles(Reward Type)
5x AmBonus Points on overseas spends.
Convert AmBonus Points to air miles with the Frequent Flyer / Travel Reward Programs.(Benefits)
Waived for the principal card.
Waived for the first three supplementary cards.
RM188p.a. to be charged from the fourth supplementary card onwards.(Annual Fee)
*A sales and service tax of RM25 shall be charged on the credit cards.
When you think about it, Islamic cards have restrictions in place for anything that’s considered to be haram. This whittles down your options when it comes to daily usage. But, when you look at the bigger picture—no compounding charges—you’re sure to come around.
Apart from this important feature of Islamic credit cards, there are plenty of other benefits that you should know about so you can weigh your options properly.
Financial protection for your family or loved ones is extremely important, especially when life’s uncertainties come into play. As an Islamic credit cardholder, you get complimentary takaful protection that helps clear off your entire outstanding balance, if any.
Early repayment rebate
Some Islamic cards come with a rebate feature that comes into play when you’re prompt with your repayment or even if you make an early payment. The rebate amount is usually adjusted against your outstanding balance.
If you have a conventional credit card, making a Zakat payment with it isn’t possible. But, with an Islamic credit card, you can make the annual Zakat payment as you see fit.
Apart from the takaful protection on offer, some Islamic credit cards also offer benevolence expenses to your beneficiary in the event of the unthinkable.
No restrictions on applicants
Although Islamic credit cards follow Shariah laws, they’re not limited to people of Muslim faith alone. In fact, anyone can apply for it and enjoy all of its benefits as long as you satisfy all the eligibility requirements specified by the card issuer.
Islamic cards allow you to make retail purchases upfront and pay for it all later. But, where the card differs from a conventional one is that there’s no interest charges involved. This is because Islamic laws, hadiths, and Quran prohibit Riba (interest) and Gharar (overcharging).
Another differentiating aspect is that Islamic credit cards are only allowed to be used for transactions that involve halal goods and services. So, anything that’s been declared as haram by Shariah can’t be bought with this card.
To give you a better idea of what an Islamic credit card is all about, here are some of the major differences between these cards and their conventional counterparts:
|Differentiating Aspect||Islamic Credit Cards||Conventional Credit Cards|
|Type of contract||Lease-based.||Loan-based.|
|Transactional limits||Alcohol, tobacco, gambling, pork, sexually-related items, and anything that’s deemed to be haram are forbidden.||No restrictions on transactions of any kind.|
|Interest charges||No interest will be levied. You will, however, need to compensate the issuer with a monthly fee.||Tiered interest rates that include compounding charges and is based on your repayment behaviour as well as the outstanding balance.|
|Need for collateral||Most issuers require you to have a deposit or provide a non-dated cheque.||No need for collateral of any kind.|
|Profit rate on deposits||Fixed, non-compounded rate that’s shared between the issuer and the cardholder.||No profits as there is no need for a deposit.|
Islamic credit cards are based on the Tawarruq contract and is restricted to Shariah-compliant transactions. These cards do not charge interest on their transactions, but a profit rate is imposed on the cars. Islamic banks also use the concept of Ujrah for making payments on their card in exchange of their services and benefits to the cardholders.
Let’s take a look at how Islamic cards work. Suppose we spend RM2,000 on the Maybank Islamic Ikhwan American Express Gold Card-i. The profit calculation for the card shall be according to the following table.
|Past Payment Behaviour||Profit Rate|
|Regular payments in the last 12 months||15% p.a.|
|Regular payments in the 10 months out of a year||17% p.a.|
|Regular payments in less than 10 months out of a year||18% p.a.|
Assuming that regular payments have been made in the last 12 months, the profit rate that shall be charged on the card is 15% p.a. For an amount of RM2,000, the profit amount accrued every month would be RM25. Therefore, you would need to pay RM2,2025 each month within the due date in order to maintain the 15% p.a. profit rate. For 17% p.a. and 18% p.a., the profit charged would be RM28.33 and RM30 respectively.
Since the card offers 1x reward points for different transactions, you could also earn a total of 2,000 reward points on the card.
As mentioned earlier, any kind of interest is strictly prohibited when it comes to Shariah laws. As a consequence, Islamic credit cards don’t have any interest charges. But, this doesn’t mean that there’s no other additional charge involved.
In fact, Islamic cards have a profit charge in place, which is the service fee levied by the issuer. However, you’ll only need to pay this charge if you haven’t paid your outstanding balance in full within the specified grace period.
The amount of profit charge can vary from one cardholder to another based on your recent repayment behaviour. The minimum monthly payment is much the same as that of a conventional credit card – 5% of the entire outstanding balance or a minimum of RM50, whichever is higher.
Late payments will attract a fee of RM10 or 1% of the due amount, whichever is higher.
Most Islamic credit cards in Malaysia follow one banking concept or another to stay compliant with the Shariah laws and Islamic principles. Some of the concepts you will come across if you’re looking for an Islamic credit card are:
To begin with, Tawarruq is a renowned Islamic financial concept where an individual buys a commodity from a seller on a deferred payment basis. The buyer then sells this product to someone else for cash or on the basis of spot payments. Put simply, the process works like a transfer of ownership and is allowed by Shariah.
Ta’widh works more on the lines of an obligation and is an agreement between the financier and the borrower. So, the financier is obliged to lend money and the borrower is obliged to make payments on time.
The Murabaha concept of Islamic financing involves a sales contract where the bank buys the product on behalf of you and then resells the same product to you. However, the contract explicitly mentions the cost incurred while buying the product and the markup rate when reselling it to you.
The Bay’ al-Inah concept involves a contract between two parties. Firstly, a person sells a product on credit at a specific price. The seller then buys back the product at a lesser price for cash. The difference in these two prices—specific and buy back—is the profit or the credit limit.
Lastly, the concept of Ujrah involves the charge levied by Islamic banks for services provided to its multitude of customers. It, quite simply, refers to the service fee.
The profit rate that you come up against repeatedly when it comes to Islamic credit cards isn’t a fixed fee in Malaysia. It works in three different tiers that are each based on your repayment history.
If your repayments have been prompt and consistent over the last year, then you’ll qualify for the first profit rate tier – 15% p.a. If your repayments have been prompt and consistent for 10 or 11 months out of 12, your card’s profit rate will be 17% p.a.
If you’ve missed making payments regularly or have made on-time payments for less than 10 out of 12 months, you’ll need to deal with a profit rate of 18% p.a.
Islamic cards also provide takaful coverage when you use the cards for booking tickets. You can protect your family against any accident emergencies that may arise during the trip. Get travel takaful coverage for services such as loss of luggage, delay in flights, and others. Among the cards given above, AFFIN ISLAMIC World Mastercard- provides a personal accident coverage of up to RM100,000. It also comes with a flight and travel personal accident coverage of up to RM1 million. The CIMB PETRONAS Platinum-i Credit Card also provides takaful coverage of up to RM1 million.
With an Islamic credit card,you can benefit from a number of privileges and benefits.
Islamic credit cards can be one of your assets if you have an Islamic savings or current account already. It provides you a lower profit rate which allows you to save more. Some of these cards have no annual fees as well.
These cards also provide benefits and privileges based on the card you choose. Islamic cards which have Visa and Mastercard would give you access to special privileges on the card. These cards also provide cashback and reward points on certain transactions. You can redeem the points for items and vouchers from the bank catalogue.
Once you have decided what are the benefits you are looking for in a card, you shall be able to choose the most suitable Islamic card based on its features. Benefits include cashback, discounts, and reward points among others. See whether the card provides travel takaful and other travel-related benefits. Some cards also offer special promotions for Hajj and Umrah pilgrimage. A no annual fee card will also save you on the additional costs. Check whether the card comes with a free concierge service.
You should make sure that the Islamic credit card is used for different transactions in order to get maximum benefits from the card. For instance, if you use your vehicle frequently, the CIMB Islamic Bank PETRONAS Platinum-i Credit Card can work for you. The card offers up to 7% cash rebate on petrol transactions. Also, the annual fee is waived for the card.
Similarly, if you are someone who enjoys golf, you can use the RHB Islamic Platinum Credit Card-i and get complimentary access to golf courses in Malaysia and Singapore. Also, make sure to use the credit card promotional deals and offers to enjoy more benefits.
In case you lose your card, contact the bank’s customer service department. It is necessary you contact the bank at the earliest so that there are no illegal transactions on your card. The bank would block your card and issue a replacement card and may charge you a fee for the replacement card.
Most banks have special support desks designed for overseas travellers. In case you have any issues with any transaction, you can get in touch with the support desks and get assistance immediately. Some cards also have premier customer care numbers which are aimed to provide support to select customers.
The eligibility criteria for each of the cards is different. Each of the above cards have specific age and income requirements.
|Minimum age requirement (Principal Card)||21 years.|
|Maximum age requirement (Principal Card)||65 years.|
|Minimum age requirement (Supplementary Card)||18 years.|
|Maximum age requirement (Supplementary Card)||65 years.|
You need to have a certain income so that you can apply for the card. The income eligibility for the cards are given in the table below.
|Card Name||Minimum Income|
|HSBC Amanah MPower Visa Platinum Credit Card-i||RM36,000 p.a.|
|AFFIN ISLAMIC World Mastercard||RM80,000|
|Maybank Islamic Ikhwan American Express Gold Card-i||RM30,000 p.a.|
|Bank Rakyat Gold Credit Card-i||RM36,000 p.a.|
|CIMB Islamic Bank Petronas Gold Credit Card||RM24,000 p.a.|
|RHB Islamic Platinum Credit Card-i||RM48,000 p.a.|
|Bank Islam Visa Infinite Credit Card-i||NA|
|AmBank Islamic World Mastercard-i||RM120,000 p.a.|
|Applicant Type||Documents Required|
|Expatriate (if eligible)||
In order to own an Islamic card, it is necessary to have an Islamic account with the bank. If you are looking for an Islamic card of your choice, you can check online to compare between different cards.
Q. Are instalment plans available on retail transactions with Islamic credit cards?
A. Depending on the bank, your Islamic credit card might support instalment payments for your retail transactions. Among the given cards, AmBank Islamic World Mastercard-i allows instalment payments for different tenure with the AmFlexi-Pay system.
Q. Do I need to inform the bank for Card-not-Present functions on the card?
A. Yes. You need to ask the bank to activate the service. There might be charges associated with the service, depending on the bank. Make sure the Card-not-Present feature is available with your card. Read the product disclosure sheet carefully or talk to a bank representative in case you are interested in initiating Card-not-Present transactions.
Q. Can I use my Islamic credit card for dining?
A. You Islamic credit card may not be applicable at all restaurants. The card cannot be used for non-halal transactions. Therefore, it is better to check with the restaurant, whether in Malaysia or overseas, if Islamic cards are eligible for payments.
Q. Can I turn off SMS alerts on my Islamic credit card?
A. Yes. You can contact the bank to turn off SMS notifications for your card. However, it is advisable that you keep the notifications setting turned on for information on any unauthorised activity on the card.
Q. What is the monthly payment associated with Islamic cards?
A. The minimum monthly payment of most Islamic cards is either 5% of the total outstanding balance or RM50 (whichever is higher).
Q. What is the profit rate range of an Islamic card?
A. The profit rate ranges from 15% p.a. to 18% p.a. with select cards even offering profit rates starting as low as 13.5% p.a.
Q. What are the factors affecting the profit rate of these cards?
A. The profit rate depends upon the repayment pattern of the last 12 months.
Q. Can I use my credit card to withdraw cash?
A. Yes, you can use your card to withdraw cash. But this will charge you with a cash advance fee.
Q. What is balance transfer feature on my card?
A. Balance transfer lets you transfer a portion of your credit limit (that is decided by the bank) to other bank credit cards.
Q. What if I miss paying the monthly instalment on my card?
A. In such cases, you will be charged with a late penalty fee of 1% that is calculated on a daily basis.
Q. Can I use my card overseas?
A. Yes, you can use your card for transactions overseas. An overseas transaction fee will be imposed in such cases.