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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
DISCLAIMER:
The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any institutions to which he may be affiliated.
Arguments and ideas propounded in this answer are based on the juristic interpretations and reasoning of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another Mufti may reach different conclusions to the one expressed by the author. Whilst every effort has been taken to ensure total accuracy and soundness from a Shari’ah perspective, the author is open to any correction or juristic guidance. On the event of any juristic shortcomings, the author will retract any or all of the conclusions expressed within this answer.
The Shari’ah ruling given herein is based specifically on the scenario in question.  The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage.  This answer may not be used as evidence in any court of law without prior written consent from the author.  Consideration is only given and is restricted to the specific links provided, the author does not endorse nor approve of any other content the website may contain.


[1] http://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/ (accessed 25/02/2016)
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