While we are all worried about the recession, and many people are facing tough times with downturned businesses and lay-offs, we are still taught to say alḥamdulillāh 'ala kulli hal. One of the positives that I see coming from this crisis is that this recession may perhaps be the wake up call people needed to stop living lives financed by debts they never dreamt of paying (even when they signed up for them).
Just last month, Bank of America CEO Ken Lewis warned … that he had no doubts 2009 would be an “awful year” for the credit card industry … Fearing a wave of credit card-related losses, banks have been aggressively setting aside funds to help cushion the blow. One problem, note analysts, is that banks aren't quite sure just how severe the losses will be.
Facing additional losses, credit card issuers are doing what they can to insulate themselves from further losses, including lowering credit limits for some cardholders, closing accounts or getting out of the business altogether.
American Express (AXP, Fortune 500) made headlines recently after it offered to pay some of its cardholders $300 if they paid off their balances and closed their accounts by the end of April.
Reuters also gives some eye opening statistics
Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.
“Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines,” she said.
Over the past 20 years, Americans have also grown to use their credit card as a cash-flow management tool, she said adding that 90 percent of credit-card users revolve a balance at least once a year, and over 45 percent of credit-card users revolve every month.
I have no sympathy whatsoever for these banks that are flopping during this crisis. They made billions upon billions exploiting people, especially the poor and students, turning them into life-long wage slaves [get this DVD if you can]. The problems they are facing pale in comparison to the oppression they inflicted on others.
This is a wake up call to everyone (Muslim or not – but especially Muslims) to stop using credit cards. Unfortunately, when someone says that people immediately begin saying things like, “But it's not technically haram if you pay it off at the end of every month.”
Ok. Let's grant that it's not. That doesn't automatically mean it is the wisest and most prudent decision for you to make. Being the person who pays off their balances and avoids riba is the equivalent of the person who drinks wine every day and has never once gotten drunk in his or her life.
If the recession doesn't wake you up, I don't know what will. This is a failed system that is founded upon something that is not only haram, but one of the most destructive sins a person can partake in. We often discuss keeping things in perspective and focusing on priorities – this is one of the top priorities of any Muslim. There are not a lot of other things that can bankrupt you in this dunya, deprive your sustenance of barakah, force you to provide for your family from haram (even if your actual income was earned through halal), be on par with committing adultery with your MOTHER, and on top of that put you at direct war with Allāh(swt).
It is time to do two things,
1. Implement the Islamic financial system in our own lives, and
2. Teach others about it.
Implementing it in our lives is easy, but comes with a high degree of difficulty. It is more mental than anything else. It requires making up your mind to not live in debt anymore, and create a plan to pay it down. If you don't have debts, then you have no excuse to hold on to a credit card anymore. Go to the bank, take out some cash, and use it.
More importantly, now is the time to present our solution to the rest of the world. Every single corporation in America is suddenly buckling down and being frugal. They are cutting unnecessary travel, cutting extra perks, and trying to work within their means. These are Islamic principles.
If we want to show the world Islam can positively solve their problems, let's start getting the message out. The sad thing is, instead of preaching this message to everyone from day one, we ourselves have succumbed to chasing the American dream by digging ourselves into the hole of mortages and monthly payments that we cannot afford. This is not the way the Muslim should live. We must be the beacon of light to others, especially in these times, to show them that no matter how bad things get, inshā'Allāh Allāh (swt) will put barakah in our rizq because we do not live outside our means. We have learned to be content with what we have been blessed with.
Instead of showing this example to others though, it is unfortunate that for many Muslims their only hope of freedom from the shackles of debt slavery is a haram life insurance plan that will cash out only after they are 6 feet under the ground.
Please see our previous posts on this issue for more details on these issues.