Ta'widh
تعويض
Pronunciation: tah-WEED
Compensation for actual loss caused by late payment, which the creditor may keep.
Definition
Compensation for real, provable loss suffered by a creditor because of a debtor's late payment, such as documented collection costs. Unlike a penalty, ta'widh is limited to actual loss, may not be calculated as a percentage of the debt or of the delay period, and must not become a source of profit. Scholars who permit it do so to deter deliberate default without reintroducing interest; others allow only a charity-directed penalty (gharamah).
Most compliant U.S. late-fee policies combine a small fixed administrative charge with a commitment that anything beyond cost goes to charity.
Related Terms
Gharamahغرامة
A penalty for late payment that the creditor may not keep; it must be given to charity.
Riba al-Nasi'ahربا النسيئة
Riba of delay: any increase charged for time on a debt, which is what modern interest is.
Murabahaمرابحة
A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
Daynدين
Debt: a fixed obligation owed by one party to another, which Islamic law protects but forbids trading for profit.
Arbunعربون
A non-refundable down payment or earnest money to secure a purchase.
Bai' al-Inahبيع العينة
A sale-and-buyback arrangement used to generate cash flow.
Compare Related Products
See how Ta'widh is used in real Shariah-compliant financial products available in Canada
Stay Updated
Get halal finance updates, new provider alerts, and expert insights
No spam ever. Unsubscribe in one click.
Ta'widh (تعويض) - Compensation for actual loss caused by late payment, which the creditor may keep. Compensation for real, provable loss suffered by a creditor because of a debtor's late payment, such as documented collection costs. Unlike a penalty, ta'widh is limited to actual loss, may not be calculated as a percentage of the debt or of the delay period, and must not become a source of profit.
- Compensation for actual loss caused by late payment, which the creditor may keep.
- Category: Contracts
- Related: Gharamah, Riba al-Nasi'ah, Murabaha, Dayn, Arbun, Bai' al-Inah
- Compare related Shariah-compliant products on HalalWallet
Source: HalalWallet (halalwallet.ca)
How to cite this page
Preferred format (HTML):
For time-sensitive claims (rates, fees, province availability), please verify directly with the provider's official documentation and note the retrieval date.
Sources and review process
This page is reviewed against HalalWallet editorial standards and source documentation.
Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-10-01
Editorial Team, HalalWallet
Independent halal finance research
Reviewed quarterly and updated for major content changes.