Are These Holiday Vouchers a Form of Riba?

Question

Is it permissible to utilize holiday vouchers under the following circumstances: an upfront defined amount is deducted monthly for five to ten months? After this period, the managing entity disburses the accumulated sum and an additional bonus.

For instance, if €400 is withdrawn over five months, amounting to €80 per month, the organization issues €530 in holiday vouchers at the end of the 5-month debit duration. Is this situation akin to a form of riba?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

May Allah guide every dimension of our lives to that which pleases Him.

From the description, the situation involves a structured arrangement where a predetermined sum is deducted from one’s earnings over several months. After this period, the total amount withdrawn is returned, accompanied by an additional bonus. This arrangement resembles a financial transaction involving elements of riba (usury or interest) in the form of a benefit resulting from a loan, which is strictly prohibited in Islam.

Riba is categorically forbidden in the Quran and Sunna due to its exploitative nature and the harm it can cause to individuals and society. Allah states in Surat al-Baqara:

“Those who devour usury will not stand except as stands one whom the Devil has driven to (madness) by (the touch of) a (mad) person. That is because they say: ‘Trade is just like usury,’ but Allah hath permitted trade and forbidden usury. Those who, after receiving direction from their Lord, desist shall be pardoned for the past; their case is for Allah (to judge), but those who repeat (the offense) are companions of the Fire: They will abide therein (forever). Allah will deprive usury of all blessing, but will give increase for deeds of charity: For He loveth not creatures ungrateful and wicked.” [Quran, 2:275-279]

In light of this, avoiding such unlawful financial arrangements is advised, and Allah knows best.

May Allah guide us all to what is pleasing to Him and protect us from anything prohibited.

I pray this is of benefit and that Allah guides us all.
[Shaykh] Irshaad Sedick
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Irshaad Sedick was raised in South Africa in a traditional Muslim family. He graduated from Dar al-Ulum al-Arabiyyah al-Islamiyyah in Strand, Western Cape, under the guidance of the late world-renowned scholar Shaykh Taha Karaan.

Shaykh Irshaad received Ijaza from many luminaries of the Islamic world, including Shaykh Taha Karaan, Mawlana Yusuf Karaan, and Mawlana Abdul Hafeez Makki, among others.

He is the author of the text “The Musnad of Ahmad ibn Hanbal: A Hujjah or not?” He has served as the Director of the Discover Islam Centre and Al Jeem Foundation. For the last five years till present, he has served as the Khatib of Masjid Ar-Rashideen, Mowbray, Cape Town.

Shaykh Irshaad has thirteen years of teaching experience at some of the leading Islamic institutes in Cape Town). He is currently building an Islamic online learning and media platform called ‘Isnad Academy’ and has completed his Master’s degree in the study of Islam at the University of Johannesburg. He has a keen interest in healthy living and fitness.