Islamic credit cards: how they work and how they differ

An Islamic credit card works like any card at the till, but the bank does not charge interest on an unpaid balance. Instead it earns through a structure its Shariah committee has approved, such as a fixed fee for the card service or a profit-based commodity sale. The Central Bank’s card rules, including the AED 60,000 income floor and the AED 230 late fee cap, apply to Islamic banks too.

Key takeaways

• Islamic cards replace interest with a structure approved by the bank's Shariah committee, such as a fixed service fee or a profit-based commodity sale.
• The Central Bank card rules apply to Islamic cards too, including the AED 60,000 income floor and the AED 230 late fee cap.
• A fixed fee costs the same on a small balance as on a large one, so compare the APR and fee table in each Key Facts Statement.
• Whether using a credit card is permissible is a religious question; we explain how the cards work and how to check a bank's Shariah approval.

How an Islamic card differs at a glance

For paying in shops and online, nothing changes. The differences are in how the bank charges for credit, what happens when you pay late and who signs off the product.

For the wider picture of how Islamic contracts replace interest, see Islamic vs conventional finance.

The structures banks use

The documents UAE Islamic banks publish show two broad approaches: a fixed fee for the card service, and profit earned by selling you commodities on deferred payment. The Central Bank requires Islamic banks to disclose the Shariah basis of each product and says it should also appear in the Key Facts Statement, so a card’s documents should tell you which one it uses.

Fixed service fee

Under this model the bank lends what you spend without interest and charges a set fee for providing the card service.

Dubai Islamic Bank’s committee certificate for its Al-Islami cards, approved on 22 August 2021, is one published example. It describes the amount you use as qard hasan, an interest-free loan, combined with a service ijara (a contract for services) and a kafala, a guarantee of payment to merchants. The bank takes a fixed annual fee for the card services, which the certificate says is levied irrespective of the balance, repayment time and use of the card, and can be paid in one sum or in instalments, including monthly.

The fee does not grow with the balance, so its cost relative to what you owe depends on how much you carry, as the worked example below shows.

Profit-based structures

Here the bank sells you a commodity at cost plus an agreed profit, on deferred payment. The commodity is then sold for cash, which funds your card limit. Banks may call the sale a commodity murabaha; buying an asset on deferred payment and then selling it in a separate sale for cash is what the Central Bank defines as tawarruq. The cost is quoted as a profit rate, alongside the APR the bank must disclose.

Abu Dhabi Islamic Bank’s Key Facts Statement for its covered cards, version 12 dated October 2025, describes one version. Profit is worked out on the whole card limit each month, then offset by profit on an investment account that holds the limit and by a discretionary bonus from the bank. The statement says the offset may not cover the profit in full if you pay less than the outstanding balance by the due date.

In practice a profit-based card behaves much like an interest-bearing card: the cost rises with the balance and with time.

Card rules that still apply

Regulation 29/2011, which holds the Central Bank’s card rules, says its provisions apply to Shariah-compliant banking services too. The one exception is how the return is worked out: Islamic banks compute it under Shariah principles instead of as interest. The Consumer Protection Standards cover Islamic and conventional institutions alike, with extra rules for Islamic products.

Minimum annual income for a credit card

AED 60,000 a year

Credit cards may be issued to people with an annual income of AED 60,000 or more; others can get a card only against a pledged deposit of at least AED 60,000.

Each bank then sets its own threshold per card. Our guide to the minimum salary for a credit card explains the floor and the deposit route.

Credit cards and the debt burden ratio

Within 50% DBR

A credit card limit is allowed as an additional facility, but card repayments must stay within the 50% debt burden ratio together with all other instalments.

Maximum credit card late payment fee

AED 230

The late payment fee on a credit card is capped at AED 230.

When an Islamic bank calls the late charge a commitment to donate, the Consumer Protection Standards still apply. The bank must tell you when it is imposed, the amount and how it is calculated, and the charge must be based on an administrative cost, with nothing in it that could count as profit on accrued profit. ADIB’s Key Facts Statement, for example, says part of its donation commitment is kept by the bank towards actual collection expenses.

Other protections that apply to Islamic cards:

• Key Facts Statement first. The bank must give it to you before you sign, and you sign to confirm you received it. See what a Key Facts Statement shows.
• APR disclosure. The bank must disclose the APR, which includes the profit and other fees compounded over a year.
• No profit on profit. Lenders may not charge interest or profit on accrued interest or profit.
• Minimum payment warning. Statements must show how long the balance would take to clear on minimum payments alone.
• No automatic limit increases. A higher limit needs a new credit bureau check and your express consent.

Time to close a credit card account

45 days

A bank must close a credit card account within 45 calendar days of the request and confirm it in writing, unless a balance is still outstanding; the card should be frozen once closure is requested.

For closing a card and getting a clearance letter, see our guide to cancelling a card. The full set of protections is in your rights as a cardholder.

What it costs: comparing an Islamic and a conventional card

Compare the APR and the fee table, not the label. A fixed fee costs the same on a small balance as on a large one, so relative to what you owe it is dearest on small balances. A rate-based charge, whether interest or profit, grows with the balance.

Worked example

A fixed fee of AED 100 a month against a rate of 3% a month

The fee, the rate and the balances are illustrations, not any bank’s prices. We assume the balance stays the same all year, the monthly charge is paid each month and there are no other fees.

1. Fixed fee card, AED 5,000 carried for a year: AED 100 × 12 = AED 1,200, and AED 1,200 ÷ AED 5,000 = 24% of the balance.
2. The same fee on an AED 2,000 balance: AED 1,200 ÷ AED 2,000 = 60% of the balance.
3. Rate-based card at 3% a month on AED 5,000: AED 5,000 × 3% × 12 = AED 1,800.
4. The same rate on AED 2,000: AED 2,000 × 3% × 12 = AED 720.
5. Break-even balance: AED 100 ÷ 3% = AED 3,333.33. Above it the fixed fee costs less; below it the rate-based card costs less.

Balance carried for a year	Fixed fee of AED 100 a month	3% a month on the balance
AED 2,000	AED 1,200 (60%)	AED 720 (36%)
AED 5,000	AED 1,200 (24%)	AED 1,800 (36%)

On AED 5,000 the fixed fee costs AED 600 a year less; on AED 2,000 it costs AED 480 more.

These are simple annual costs. The APR, which the bank must disclose, also counts the card’s other fees, which makes it the better single figure for comparing two real cards.

Is a credit card halal?

We do not give religious rulings. What we can explain is what a Shariah approval covers and how to check it for any card.

Each Islamic bank has an Internal Shari’ah Supervision Committee, which the Central Bank makes responsible for the Shariah compliance and fairness of its products. The committee reviews new products and issues fatwas on the bank’s business; some banks publish a product’s approval as a Shariah certificate, as Dubai Islamic Bank does for its cards. Nationally, the Higher Shari’ah Authority at the Central Bank issues standards that are binding on Islamic institutions, and resolutions that the Central Bank’s rules refer to, such as the one on early settlement fees.

Shariah approval you can check

Shari'ah basis in the KFS

Islamic financial institutions that offer Shari'ah-compliant products must disclose the Shari'ah basis of each product and its approval by the Internal Shari'ah Supervision Committee, and the Shari'ah basis should also be included in the Key Facts Statement.

The Consumer Protection Standards also require Islamic banks to show you their Shariah certificates and give you access to their internal Shariah function if you doubt a product’s compliance. Presenting a conventional product as Shariah-compliant is listed as a prohibited misleading practice.

A related question is whether a conventional card paid in full every month is acceptable. Under the Central Bank rule, no interest is charged on purchases when the full statement balance is paid by the due date, but interest applies if you pay only part of it. Whether that is acceptable is a question for a qualified scholar.

Choosing and checking a card

There is no single best Islamic card, because the cheapest one depends on how you use it. Before you apply, read three documents and match them to your habits.

1. The Key Facts Statement. It should name the Shariah structure and set out the profit rate or fixed fee, the other fees, such as the late payment charge and the cash withdrawal fee, and the key terms. ADIB’s, for example, also shows the APR and how the minimum payment is worked out.
2. The schedule of charges. Check the annual fee and whether a fixed fee applies every month or only when you carry a balance.
3. The Shariah certificate. Some banks publish it on their website; if you cannot find it, ask the bank for it.

If you pay in full every month, the annual fee and benefits matter most. If you carry a balance, compare the fixed fee and the APR against the balance you expect to carry, using the arithmetic above. Interest and fees on conventional cards are a topic of their own: see credit card interest and fees. For more on Islamic structures, browse our Islamic finance guides.