The contract of qard (interest-free loan) may be put into practical use in many shari’ah-compliant ways, key among which are overdrafts, currents accounts, and credit cards:

• Overdrafts: in conventional corresponding banking relationships, payable overdraft balances are typically treated as interest-bearing loans. However, in Islamic banking, it is impermissible that an Islamic bank and its correspondent banks base their relationship on the overdraft facility in which interest is paid on payable balances. Instead, the overdrafts of one party drawn upon the other are considered interest-free loans without any claims for interest. And it is permissible that the bank comes into an agreement with its correspondent banks to place a ceiling on overdraft amounts.
• Current accounts: In Islamic banking, current accounts are considered interest-free loans, rather than deposits. As such, ownership of these funds is transferred to the receiving bank which becomes liable to repay the face value of the underlying amount. However, shari’ah doesn’t restrict a bank from imposing charges on services rendered to current account holders such as demand withdrawal, chequebooks, ATM cards, etc.
• Credit cards: Shari’ah doesn’t permit that a bank issue credit cards that provide an interest-bearing revolving credit facility. To avoid interest payment, an Islamic credit card provides a revolving credit facility within the credit limit and period as determined by the card’s issuer. This facility is based on the contract of qard (aqd al-qard). However, the issuer may impose charges on credit cards for cash withdrawals from its ATM machines insofar as such charges are collected for services and are independent of the loan itself. In so doing, it is not permissible that the bank takes into account the period of repayment of the amounts withdrawn.