But the same goes for the television set that we purchased using the store’s flexi plan; the clothes that we purchase online by using a credit card; and the loan repayment on the car and on the house. When we enter into these types of transactions, we are technically in debt.Borrowing money to buy or finance something that we can’t afford in the first place means that we are going in debt. We owe someone, something; we owe someone money. It may look harmless to borrow a few dollars from a friend for a quick lunch, but in reality, that money is not ours, and we need to repay our debt. That is just a few dollars of debt over a meal.
Prophet Muhammad (peace be upon him) also said:
Credit card companies and conventional banks are the tycoons of interest – they thrive on such income. Interest – also known as usury – is largely forbidden in Islam, defying the cause of lending to those who are financially in need:But besides extravagance, the sordid problem with debt is compounded when riba (usury) piggy-backs on loans and credit card plans. This causes borrowers, not only to be oppressed, but to incur sin.
"Now his skin has become cool for him." (Ahmad)When we purchase something with a “promise” of repayment in a stipulated number of installments, it begs to wonder whether we will live to see the debt through. Imagine the burden of debt being carried to the grave. The Prophet refrained from offering the funeral prayer for one who had died owing two dinars, until the companion Abu Qatadah promised to pay it off for him. When Abu Qatadah saw him the following day he said, I have paid it off, the Prophet said:
As for necessities, it is strongly encouraged to seek non-interest based forms of financing. Whether it is through true Islamic financing institutions or borrowing from friends and family with strong-willed intentions to pay back, interest-free debt could be a reality. Of course, it is best to ask those who hold the same beliefs about debt. Prophet Muhammad says:There are ways to avoid debt, or at least, curtail the amount of debt one can manage. Strictly separating needs from wants, with discipline and brutal honesty, helps us reduce the risk of going into large amount of debt.
(On Islam / 24 April 2012)
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