Glossary
Riba al-nasi'ah
The extra you are charged simply for being given more time to pay.
ربا النسيئةribā al-nasī'ah
This is the delay kind of riba and it is what a credit card interest rate is. It is the pre-Islamic practice AAOIFI describes in Shariah Standard No. 3, where a lender would ask a debtor at maturity: do you want to settle now, or pay an additional amount for a further period of credit? Any charge that goes up because you took longer falls here. It is why an Islamic card cannot price late payment as a percentage of the balance per month, and why AAOIFI Shariah Standard No. 2 clause 3/3 rules out an interest-bearing revolving facility.
Related terms
RibaAny extra amount a lender gets back on top of what was lent, which Islamic law forbids.Riba al-fadlGetting more back than you gave when swapping two lots of the same thing, like trading one kilo of good dates for two kilos of poor ones.GharamahA fine for paying late, charged to make you pay on time rather than to cover a real loss.Ta'widhCompensation for money the bank actually lost because you paid late.
Sources
- AAOIFI, Shariah Standards, Standard No. (3), Appendix B; Standard No. (2) clause 3/3