What is the ruling on the overdraft facility some UK banks offer, with fees charged as a percentage of the amount drawn? And what about a bank paying an employee part of their salary early in return for a fixed fee?
The situation
Some UK banks offer their customers a lending facility called an overdraft, with reduced fees charged as a percentage of the amount drawn. For example, drawing £500 for one day costs 0.4p.
The ruling
This is in reality pure riba (usury), even if the name is different and whether the fees are small or large.
Allah says in His Book: “O you who believe, fear Allah and give up what remains of riba, if you are believers. And if you do not, then be informed of a war from Allah and His Messenger” [al-Baqarah 2:278–279].
The Prophet ﷺ said: “Riba has seventy degrees of sin (or he said: seventy kinds), the least of which is like a man marrying his own mother.” Narrated by Ibn Majah.
Bringing forward part of a salary for a fixed fee
As for someone who receives their salary through the bank on a set date each month, where the bank offers to pay part of the salary early in return for a fixed fee (not a percentage of the amount drawn) that is small and matches the work the bank does, or what is called an administrative charge, this arrangement is permissible under the conditions stated above.
And Allah knows best.
Director, The Bridge of Wisdom Limited (Sharia Consultancy)DM-2026-004 · 6 October 2026
About the mufti
- Holds ijazahs (formal licences) to issue fatwas and in comparative fiqh (Islamic jurisprudence).
- Postgraduate studies in Usul al-Fiqh (principles of Islamic jurisprudence).
- Member of the Sharia Committee of the Halal Food Council of Europe (HFCE).
- Adviser and mufti to a number of institutions across the Muslim world.
- Scholarly reviewer and editor (muhaqqiq) of books for a number of publishing houses.
- Imam, khatib and lecturer, formerly in Egypt, Malaysia and Indonesia, and currently in the United Kingdom.
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