Bank charging a processing fee when giving a loan
Question
I want to buy a computer for 8000 aed by credit card. My bank is offering 0 percent interest installments for that. But they are charging me a one time processing fee of 50 aed to convert the whole amount (8000 aed) into 3 months installments. Please let me know if this processing fee will be considered as interest or is it permissible.
Answer
This is also a form of interest since the hadeeth explains that every loan which draws an added benefit is considered as riba and interest. Hence, this fee seems to be part of that riba.
And Allah Ta'ala (الله تعالى) knows best.
- Answered by
- Mufti Ebrahim Salejee (Isipingo Beach)
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