Question Summary:
Is it permissible to use credit cards with an agreement of paying interest in case of default in payment?

Question Detail:

I need to know about Credit card Usage.
There is an agreement in case of late fees there will be an interest.
So it is possible for us to avoid interest in case in time payment.
But my question is, there is an agreement on interest payment which is
haram and the credit card is not the necessity of life now. 
There are other alternatives are there of credit card like prepaid Card which
works similar as credit card. People are going for credit card only to
enjoy its offers and benefits like airport lounge access for free
which can be arrange by paying cash if you don not have the card, So
in other word now credit card is not the necessity but to enjoy the
luxurious of this world and to save money on different items and
airport lounges. 
Please confirm is it still halal to use credit card
as some scholars allowed to use and some not, is is still halal to
agree to pay interest if you are late means you will pay as you agreed
on it? Agreement on paying interest is OK?

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
A credit card represents a loan offered by a credit card company to the cardholder. If the loan is not paid timeously, the credit card holder is charged interest. Interest is clearly Haram.
However, in this day and age, the use of credit card has become so common that at times not having a credit card becomes very challenging especially when dealing in a conventional and corporate world. In many instances, a deal or payment cannot be done except through a credit card. While we acknowledge that the ideal situation is to avoid using a credit card, Shariah also takes into consideration practical realities and difficulties.
In principle, when a person enters into a loan transaction with an invalid condition such as agreeing to pay interest after its due date, then such transaction will be regarded permissible while the invalid condition (of paying interest) will be void.
If one intends to use a credit card, then he should do so on condition that he is confident in paying back the owe able amount before its due date. If the cardholder is not confident in paying back the owe able amount before its due date, then the use of a credit card will not be permissible.
The credit card contract with an un-Islamic condition of paying interest on late payments is analogous to a person who enters into a service contract of using electricity from the municipality. The contract has a condition of interest charges upon late payments. It will be highly impractical to state that one should not enter into such a contract as it has an interest payable clause due to late payments. In that instance, we do not advise the use of lamps and candles. We understand the need to enter into a service contract with the municipality and make timeous payments to avoid paying interest. This is despite the fact that the Fuqahas (Jurists) have ruled that a contract of service (Ijaarah) with an un-Islamic condition makes the entire contract void. This is even more serious than an un-Islamic condition in a credit card situation which is a loan where the loan will be at least valid. In the instance of using the services of the municipality, the entire contract is invalidated. In this we considered the need which creates leniency.
One may also use the benefits provided by the credit card company on condition that the benefits do not consist of anything Haram and the benefits are not stipulated as interest. This will be regarded as gift from the credit card company. [1]
 
And Allah Ta’āla Knows Best
Abdul Hannan Nizami,
Student Darul Iftaa
Chicago, USA
Checked and Approved by,
Mufti Ebrahim Desai.