Wednesday, February 8, 2023
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Balance transfer check fee

Fatwaa ID: 251

Question:
Salam alaykum. I usually get balance transfer checks from banks . They charge a one time fee for the loan, for example 2 percent. Then no interest if paid full within 12 months. Is this one time 2 percent fee for the loan a hidden interest fee?

Answer:

In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

If a creditor incurs any genuine cost or expense in facilitating the loan or transferring it, then he may charge that from the debtor. He may not charge anything extra or a percentage of the loan. That would be interest.
In the enquired situation, charging the debtor a percentage as transfer “fee” based on the loan amount is impermissible. It will not be permissible for the debtor (you) to opt for this. This is in reality interest.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين

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