What is the Shariah ruling of the cashback or rewards on the credit cards in Canada.

Bismillahi Ta’ala

Walaikum Assalam Warahmatullah

These rebate/cashback offers etc are as per my understanding tabarru’ (i.e. gift from the bank). These are used as an incentive for you to use their credit card service.

There are essentially two possibilities for these rewards:

a. The rewards are not intrinsically linked into your transaction. This means the rewards are not legally dependent you using the loan. If it is, then the return is a direct discount upon the loan-transaction which will be termed ribaa’.

But, This does not seem to be the case, since cc company only give rewards on specific purchases with third party merchants and not mere usage of the card like cash-advance. Instead Credit Card company company only uses your spending as a calculation measure to calculate your cash-back rewards.

b. The rewards are given by the cc company as an separate measure, albeit using your spending data to calculate its value.

In this case, you are not in a legal contract to receive cash-back for your spending. Most Terms and Condition would mention that the Credit Card company is at liberty to suspend, change the terms and rewards without prior notice. This is indicative that you cannot hold them legally binding for what kind of rewards they will finally end up awarding you.

Thus far in my reading, this has been the case. If it is accurate, and we will treat it as such until contrary information comes forth, the rewards will be termed as Hiba according to Shariah and permissible.

P.S The above in regards to cashback itself, and should not be confused with the conditional usage of credit card such that one does not engage in any interest based transaction.

Wallahu A’lam

And Allah Ta’āla Knows Best
Mufti Faisal al-Mahmudi