Stipulating a fixed penalty in the event of a delay in repaying a loan
Question

                My question is about bank interest(sood).

I live in england as a foreign student. here in england a bank is offering an account which allows you to overdraw up to £2500.which is free for first 4 months from the date of opening the account. if you withdraw the money after 4 months or you withdrew the money before that period and you didnt pay back the money you would be charged £1 daily no matter you withdrew £1 or £2500.there are no other charges.
Does this £1 daily charge come in interest or it is legitimate as interest is always in percentage of the amount you use...

some of my friends say that it doesn't come in interest or sood as it is not the percentage of the amount you use rather it is bank services charges which is fixed whether you withdraw £1 or £2500..

if you want to know further about this bank account you can visit the website of bank. bank name is halifex and account name is switch accnount.

I am looking for your reply as I desperately need this money if it is legitimate .
Praise be to Allah.
      It is not permissible to stipulate any benefit when giving 
      a loan, or to stipulate a penalty in the event of a delay in repayment, 
      whether the penalty is fixed or is connected to the amount of money 
      borrowed. And it is not permissible to take a loan if a penalty is 
      stipulated, even if the borrower is determined to pay back on time, 
      because entering into this contract is committing to riba and approving of 
      it, in addition to the fact that a delay may occur, thus forcing one to 
      pay the penalty. 

    It says in a statement of the Islamic Fiqh Council of the 
    Muslim World League in Makkah, issued in their eleventh conference, 
    statement no. 8: If the lender stipulates that the borrower has to pay a sum 
    of money as a financial penalty of a fixed amount or a specific percentage, 
    if there is any delay in repayment beyond the time agreed upon by both, then 
    this is an invalid condition, and he is not required to fulfil it; indeed it 
    is not permissible, regardless of whether the one who stipulated it was the 
    bank or anyone else, because this in and of itself is the riba of the 
    Jaahiliyyah that the Qur’aan forbids. End quote. 

    It says in a statement of the Islamic Fiqh Council about 
    credit cards: It is not permissible to issue a credit card that is not 
    covered or to deal with it, if it is stipulated that interest (riba) is to 
    be paid, even if the one who requests the card is determined to pay it off 
    within the free period. 

    For the full text of the statement, please see the answer to 
    question no. 97530. 

    Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) was 
    asked: The banks give their customers credit cards called Visa, whereby they 
    can withdraw cash from the bank even if there no money in the account at 
    that moment, on the basis that it will be paid back to the bank within a 
    specific time period; if it is not repaid before the end of that period, 
    then the bank will demand more than the customer withdrew. Please note that 
    the customer pays an annual fee to the bank in return for using that credit 
    card. I hope that you can explain the ruling on this credit card. 

    He replied: 

    This transaction is haraam, because the one who signs up for 
    it is committing to pay riba if he does not pay it off within the specified 
    time. This commitment is invalid, even if the person believes or thinks it 
    most likely that he will pay it off before the period ends, because things 
    may change and he may not be able to pay it off. This is something in the 
    future, and no one knows what will happen to him in the future. Such 
    transactions are haraam. And Allah knows best. 

    End quote from Majallat al-Da‘wah, issue no. 1754, p. 
    37 

    If a person borrows thousands of pounds from someone else, 
    and he is obliged to pay one pound if he delays repayment, or that is 
    stipulated at the time of making the contract, it is riba and is haraam. 

    Ibn Qudaamah (may Allah have mercy on him) said: Every loan 
    in which it is stipulated that more must be paid back is haraam, and there 
    is no difference of opinion concerning that. 

    Ibn al-Mundhir said: They are unanimously agreed that if the 
    lender stipulates that the borrower must pay back more or give a gift, and 
    he gives the loan on that basis, the extra amount is riba. It was narrated 
    from Ubayy ibn Ka‘b, Ibn ‘Abbaas and Ibn Mas‘ood that they forbade loans 
    that bring benefits. 

    End quote from al-Mughni (6/436) 

    Ibn ‘Abd al-Barr (may Allah have mercy on him) said: I do not 
    know of any difference of opinion concerning the view that if it is 
    stipulated that something extra be paid back with a loan, this is riba and 
    is haraam, and it is not permissible to consume it. 

    End quote from al-Istidhkaar, 6/513 

    And Allah knows best.