Happy African American entrepreneur using mobile phone and credit card from online payments while working at night in the office.

The main difference between an Islamic cheque/current account and a traditional cheque/current account lies in how they operate and the principles they follow:

1. **Islamic Cheque/Current Account:**

   – Shariah Compliance: Islamic cheque/current accounts operate in accordance with Islamic principles, avoiding elements such as interest (riba) and forbidden (haram) business activities.

   – No Interest: In Islamic accounts, there is no concept of earning or paying interest. Instead, the bank operates on a profit-sharing model or offers other Shariah-compliant services.

   – Profit-Sharing: The bank uses the funds deposited by account holders for Shariah-compliant business activities. Profits generated from these activities are shared with the account holders based on predetermined profit-sharing ratios.

   – Risk-Sharing: Account holders also share in the risks of the investments made by the bank. If the bank faces losses, the account holders may experience a decrease in their funds.

   – Transparency: Islamic banks are required to be transparent about their operations, and they must disclose the types of activities they invest in.

2. **Traditional Cheque/Current Account:**

   – Interest-Based: Traditional cheque/current accounts operate on an interest-based system. Banks pay account holders a predetermined interest rate on their deposits, and account holders may also pay interest on loans or overdrafts they take from the bank.

   – No Profit-Sharing: Unlike Islamic accounts, there is no profit-sharing concept in traditional accounts. The bank keeps the profits earned from its investments and business activities.

   – Risk to Bank: In traditional accounts, the bank bears the entire risk associated with its investments and business ventures. Account holders’ funds are not subject to these risks.

   – Wider Range of Services: Traditional banks may offer a broader range of services, including interest-based loans, mortgages, and credit cards, which are not permissible in Islamic banking.

Ultimately, the key distinction is that Islamic cheque/current accounts adhere to Islamic principles, offering profit-sharing instead of interest. Traditional cheque/current accounts, on the other hand, operate on an interest-based system and provide a wider array of financial services that may not be acceptable for those seeking to follow Shariah-compliant banking practices.

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