Zakat on Debit Card Deposit?


Assalaamu alaykum wa rahmatullaah. I would like to ask regarding paying zakat on the money that a person has deposited from his own money in an Islamic bank in order use to use their covered card service. For example, the bank, before offering the covered card (debit card), requires from the client to give them 10,000 in cash, and they will keep it with them in a separate account (separate from the savings or current account) in order to grant the person the covered card. Upon the 10,000 cash given to the bank, they will set the maximum card limit to 7,500 that can be used. The bank said that this is sharia complaint as the person is using his own money that he has deposited and the bank then deducts the owed money from the person’s main bank account. The 10,000 cannot be withdrawn by the person unless he cancels the covered card program and hands them back the card. However, he can withdraw 7,500 from that card, which the bank will deduct 100% from the person’s main bank account. I would like to ask: does the person have to pay zakat on that money even though it is not in his full possession? If yes, then how should he calculate it? And would he have to pay for the past years, during which he did not know that he had to pay the zakat on such financial agreements? May Allaah reward you.

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallahu ‘alayhi wa sallam, is His slave and Messenger.

You must pay zakat on those ten thousand if they reach the Nisaab (minimum amount liable for zakat which is equal to 85 grams of gold or 595 grams of silver) by themselves or in addition to other money or gold or silver or tradable items. The amount of zakat is 2.5%.

If you have not paid zakat on it the previous years, then you should do so now, because zakat is not waived by the fact that its time has passed. Also, the fact that the amount is mortgaged with the bank does not prevent one from the obligation of paying it. Zakat must be paid on the money that is subject to zakat, even if such money is mortgaged. So you should pay zakat on the mortgaged money as long as you have other money to pay from.

Ibn Qudaamah, may Allah have mercy upon him, said, “If a person mortgages cattle and a whole lunar year elapses while it is in the hands of a mortgagee, then it is obligatory on the person who mortgaged the cattle to pay the zakat as he is the complete owner, so if he can pay the zakat from other things, then it is an obligation.”

Also, Ibn Hazm said in Al-Muhalla, “If a person mortgages cattle, gold, silver, land that he cultivated, or palm trees that yielded fruit, and a whole lunar year elapses, then zakat must be paid on all this … because it is property that resulted from his property, and the obligatory zakat is a must on it as long as his property is not transferred to someone else [i.e. as long as he is still its owner].

An-Nawawi said, “If a person mortgages cattle or other zakat funds and a whole lunar year elapses, then there are two views for this: the adopted view – which is the view authoritatively asserted by the majority of the scholars – is that zakat must be paid on it because of fully owning the property. It was also said that there is a difference of opinion regarding it, like that regarding the usurped property, as the person (in this case) is not able to dispose of his property.”

Allah knows best.

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The Obligation of Repaying The Debt.

Taking a loan (debt) is a form of mu’amalat (social and economic dealings) that is allowed by the Islamic Shari’ah to its adherents in facilitating their daily affairs. There are several conditions that have been stipulated by Muslim scholars upon the debtor and creditor so that such provision that is allowed in Islam does not get abused. Islam deems debt as a practice that is permissible when there arise genuine need and significance…..

Taking a loan (debt) is a form of mu’amalat (social and economic dealings) that is allowed by the Islamic Shari’ah to its adherents in facilitating their daily affairs. There are several conditions that have been stipulated by Muslim scholars upon the debtor and creditor so that such provision that is allowed in Islam does not get abused. Islam deems debt as a practice that is permissible when there arise genuine need and significance. However, Islam does not encourage a person to be in debt if the intention is solely to live with pleasure and luxury. Rasulullah had supplicated to Allah asking for protection from the burden of being in debt, as mentioned in the hadith of A’ishah (which means):

Allah’s Messenger used to invoke Allah in the prayer saying, “O Allah, I seek refuge with you from all sins, and from being in debt.” Someone said, “O Allah’s Messenger! (I see you) very often you seek refuge with Allah from being in debt.” He replied, “If a person is in debt, he tells lies when he speaks, and breaks his promises when he promises.” [Narrated by al-Bukhari]

Rasulullah’s invocation indicates to us how being in debt is a practice that is unhealthy if it is not properly managed, for it can cause the debtor to lie when speaking and breaks his promise after making them. Hence, it behooves us as the Muslim Ummah to avoid it according to our level best.

Lately, we notice that living with debt is becoming the norm for some within today’s society. Even more saddening are those that are financially sound, and yet they opted to be in debt, with the presumption that it is the best approach in attaining profit and wealth.

Such negative presumption has resulted in many individuals who are financially capable in completing purchases in cash, but yet prefers to remain in debt for their purchase and sale transactions even though it only involves their grocery and household needs. They pursued that route thinking that cash payment will lead to loss and difficulty.

Looking at the lifestyle of consumers today, one of the hot issues relating to consumerism is the new form within the debt culture, namely the usage of credit card. Findings from the Malaysian Department of Insolvency revealed that young executives are also among those caught in the declaration of bankruptcy due to their failure in paying off their credit card debt.

This predicament is truly worrying and must be given serious attention given the fact that these young individuals are within the productive age group. For sure, many consumers nowadays are grappling with credit card debt problems for not thinking far ahead and easily duped by the “temporary pleasure” promised by those plastic, electronic cards. Credit card facilities are no longer only available at hypermarkets, but now include restaurants and clothing stores. Consumers are easily deceived by sale promotions that they become unaware of going excessive with their credit card purchases, only to entrap themselves in the end. These type of consumers are likened as those that “do not measure their garments’ on their own bodies” when spending (meaning: living beyond their means).

A portion of the Muslim ummah nowadays does not take heavy precaution regarding the repayment of their debt. Therefore, we find many debtors that refuse to pay off their debt. For example, educational, housing, and car loans, loans from companies or personal loans, and unpaid rental payments. Moreover, there are those that deem paying off those debts as something trivial and insignificant. Unfortunately, some are even willing to be deemed as bankrupt for as long as they do not have to pay back those accumulated debts.

Let us altogether ponder upon the hadith of the Prophet, narrated by Abu Hurayrah (which means):

“It is an act of oppression on the part of a [financially able] person to procrastinate in fulfilling his obligation.” [Narrated by al-Bukhari]

Rasulullah had also described regarding those that refuse to settle their debts. In the hadith of Abu Hurayrah, Rasulullah said (which means):

“Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him.” [Narrated by al-Bukhari]

Do we not remember how Rasulullah would refuse to perform the funeral prayer upon those that did not settle their debts? Even though some ulama’ (scholars) opined that this reluctance by Rasulullah had occurred during the early days of Islam, but it still manifests the importance and emphasis on the issue of debt in Islam. Not only that, even the martyrs, who were willing to sacrifice their wealth and soul for Islam, will not be spared from this obligation if they still have unsettled debt.

In the hadith of ‘Abdullah ibn ‘Amr, Rasulullah said (which means):

“All the sins of a shaheed (martyr) are forgiven except debt.” [Narrated by Muslim]

Therefore, let us fully realize upon the significance for everyone to repay their own debts, whether to the country, individuals, and others, for the sake of safeguarding the interest of the society, religion, and nation.

To end this point, let us derive several essential points as guidelines for all of us, namely:

  1. The Muslim Ummah must have full certainty that those that intentionally do not repay the debts accumulated will be held accountable and responsible before Allah in the Hereafter.
  2. The Muslim Ummah must fully comprehend that taking a loan is a form of mu’amalat in Islam that has its own conditions that are wajib (obligatory) to be fulfilled, in order to avoid retribution in the Hereafter.
  3. The Muslim Ummah must comprehend and remain cognizant that incurring debt without justified reasoning will cause its doer to plunge into perdition.