Charging late fees
Fatwa No: 81771

Question

Is charging late fees considered Riba?

Answer

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

Paying late fees when paying the debt that is due is pure Riba (interest and/or usury) and it is Islamically forbidden. It is the type of Riba used by the Arabs in the pre-Islamic era of ignorance. The creditor amongst them would say to the debtor: "Either you pay or you pay interest." Thus, paying late fees is Riba.

Allah knows best.

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