Question:

Is it permissible to benefit from the incentives offered for switching to a Reward Current Account with Halifax?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The Answer:

After reviewing related documents and speaking personally to Halifax regarding the Reward Current Account, we are of the opinion that it is permissible to receive the £125 from Halifax for using the Current Account Switch Service.  However, the £5 monthly rewards are impermissible and a form of interest.

The Fiqh:

The £125 is an incentive to customers in order for them to opt Halifax for banking.  It is a unilateral payment not in lieu of any counter-exchange.  Thus, it does not fall under Riba (interest).
In order to receive £5 a month, the primary conditions are:

1. Pay in £750 or more
2. Pay out at least 2 different direct debits and stay in credit.[1]

According to Shari’ah principles, a deposit in a bank is a loan to the bank.  Thus any conditional incentive in lieu of such a deposit, whether material gifts, financial incentives, services or benefits falls under the famous and accepted legal maxim which states,
“Every loan which incurs a benefit is interest (Ribā).”
Thus, the £5 reward is conditional to the £750.  One is loaning £750 monthly to a bank and receiving £5 reward in return.  This is a form of interest.
If one cannot opt out from such a scheme and happens to receive payments, he should switch to an account which does not involve this reward scheme.
And Allah Ta’ālā Alone Knows Best
Mufti Faraz Adam al-Mahmudi,
www.darulfiqh.com
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