Are we allowed to use credit union deposit schemes?

Q: Are we allowed to use credit union deposit schemes since they offer dividend instead of interest and its a very small amount. 1% or 2% dividend is offered on your savings annually. Please advice accordingly as dividend and interest are different as described by the finance experts, dividend is a profit on your money. 


الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب

A: It is not permitted to use credit union deposit schemes.  These are simply saving and lending schemes that charge interest on their loans.  As the rate of return tends to be uncertain, it is represented as a dividend calculated at the year end as opposed to a fixed interest rate.  Thus, it is interest, only that it is not at a fixed rate as the rate of return depends upon how well the credit union performs.

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