Interest Money

What to Do with Interest Money in Islam

1. Islam’s Prohibition of Riba (Interest)

Islam strictly forbids the giving and receiving of interest (Riba). Accumulating interest in bank accounts, even unintentionally, raises concerns about its proper disposal.

2. Donating Interest Money

According to Islamic principles, it is not permissible to benefit from interest money. Instead, it is recommended to donate it to charity as a way of disposing of the Haram funds in a Shariah-compliant manner.
While there is no religious reward for donating interest money, it ensures the elimination of Riba in a Shariah-compliant way.

3. Identifying Riba in Islam

In Islam, Riba refers to interest gained or paid on transactions or savings, which includes:

Interest earned from savings accounts, ISAs, and other savings investments.
Interest earned by lending money, property, or goods.
Payments of interest for credit card fees, loans, or mortgages.
When donating Riba to charity, one should donate the amount of interest earned, representing the money accumulated from savings interest.

4. Understanding the Difference between Riba and Interest

In essence, there is no difference between Riba and interest. “Riba” is the Arabic word used in the context of Islamic finance.
It is advisable to seek guidance from an Islamic finance expert for any specific concerns, queries, or questions regarding Islamic affairs.

5. Prohibition of Riba in Islam

Allah (SWT) explicitly instructs believers in the Holy Qur’an to abstain from engaging in interest-based transactions:
“O you who believe! Fear Allah and give up what remains [due to you] of interest, if you are true believers.” (2:278)
High levels of interest can lead to debts and financial insecurity, exploiting individuals with low incomes and lacking a financialsafety net.
Islam promotes non-interest based giving, charity, and long-term investments for the benefit of others, such as Sadaqah Jariyah and Waqf projects, while Zakat ensures social security for those in need.

6. Significance of Riba as a Major Sin

Riba is generally considered one of the major sins in Islam and is explicitly discouraged in the Qur’an.

7. Recommended Action with Interest Money

Ideally, one should avoid engaging in interest-based activities altogether. However, circumstances may sometimes make it challenging.
In such cases, it is advised to keep a record of any interest earned and donate the money to charity for Halal purposes in a Shariahcompliant manner.
At Sunnah Charity, your donations are utilised and are implemented in Shariah-compliant projects.

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