iFreedom card caters to debt-averse Muslims
For years, devout Muslims have been unable to use credit cards since
the Koran forbids the charging or paying of interest. As a consequence,
such everyday tasks as booking flights and reserving hotels and rental
cars has been challenging.
The iFreedom Plus MasterCard is being launched by UM Financial of Toronto specifically for this market. The card was reviewed and approved by a special panel of Muslim religious scholars. Its roots can be found in the preloaded (prepaid) card, which has been available in Canada for the past year.
Traditionally, banks have not offered interest-free credit cards as they are not profitable. To comply with Sharia law's ban on interest, the iFreedom Plus MasterCard is preloaded up with a certain amount of cash that the user pays in advance. The card is then used until the balance is completely depleted. At that time, the card may be preloaded with cash again for a 95-cent fee.
The new card will carry a $50 fee -- good for two years -- which is competitive with some of the credit cards on offer today. The card may be preloaded with up to $6,000. Because there is no loaning of funds, there is no interest charged.
The prepaid card was created with younger credit card newcomers in mind. No credit check is required as no credit is actually extended. The card also offers 1 per cent cash back on purchases over $100.
Written by Melanie Dixon.
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