Islam forbids interest (Riba), both receiving and paying it. Many of us can end up accumulating interest through our bank accounts even if we don’t want it, so what should we do with Interest money?
Since it is not permissible to utilise interest for one’s own benefit one should donate it to charity. Although there is no religious reward for doing so it at least disposes of the haram funds in a shariah-compliant way.
In Islam, Riba is interest gained or paid on transactions or savings. This includes:
In the case of donating Riba to charity, you would be required to donate the amount of interest earned e.g. the money accumulated as savings interest.
Essentially there is no difference. “Riba” is the Arabic word which is used in an Islamic context.
As with all Islamic affairs, we would recommend consulting an Islamic expert on finance for any concerns, queries or questions you may have.
Allah (SWT) tells us in the Holy Qur’an to not engage in interest-based transactions/investments:
“O you who believe! Fear Allah and give up what remains [due to you] of interest, if you should be true believers.” (2:278)
High levels of interest can lead to debts and financial insecurity, exploiting people on low incomes and without a financial safety net.
Zakat also ensures a social-security net for people in need.
Riba is generally considered one of the major sins in Islam and explicitly discouraged in the Qur’an.
Ideally, we should not invest/engage in interest-based activities. However, this may not always be possible.
In this case, you can keep note of any interest earned and donate the money to charity in a Shariah-compliant way (for halal purposes).
Here at Islamic Relief, your donations help us save lives and are implemented in Shariah-compliant projects.
Donate Riba today