4 Islamic articles on: Islam and usury

Table of contents for the topic Islam and usury
  1. Is it permitted to use interest to save for marriage or college?
  2. Are savings accounts halal if you give away the interest in charity?
  3. Is it permissible to earn interest to give it away in charity?
  4. The income of a father who works in a usurious bank

IslamQA: Is it permitted to use interest to save for marriage or college?

Salam! We have been going through hard circumstances since I'm born. It has always been hard for us to meet our ends. My mum has saved some amount of money for my marriage now, she wants to fixed deposit it in the bank. So that until I get married she can afford my brother's university fees with the interest she would get on it. Would that be right? Cux there's no other mean by which my brother can get his education 🙁

Alaikumassalam wa rahmatullah,

May Allah ease your circumstances. Unfortunately interest is never OK to earn, Islam considers it immoral, it’s similar to stealing. She can instead invest in halal savings accounts such as those offered by Al Rayan Bank in the UK. She can also invest in the Azzad Wise Capital Fund which earns money from Islamic bonds.

IslamQA: Are savings accounts halal if you give away the interest in charity?

Assalamualaikum, most reputable banks near me gives interest for a savings account, there are 2 Muslim banks but they don't have the best customer service reviews. I need to open a savings account but I don't want any Interest attached. A Muslim friend of mine with the same issue opened an account but records the amount of interest added each time and doesn't spend that amount. Is this allowed? Jzk

Alaikumassalam wa rahmatullah,

Why not just keep it in a checking account? Unfortunately even when keeping money in a checking account, we are still involved in usury because the bank uses the money to make interest-bearing loans to other customers. So ideally we should use Islamic banks if this option is available at all.

It is not considered a good thing to do anything that earns interest even if you give away the interest in charity. But if a person has no choice, then it is permitted to do so and give the money away.

Another option would be to keep the money in a mutual fund that earns money from Islamic bonds, such as the Azzad Wise Capital Fund (WISEX). This in general has higher earnings than savings accounts and helps fund halal projects, but it is slightly riskier, although nowhere as risky as investing in stocks. To invest in WISEX, you just need a free account from a site like TD Ameritrade, then you can deposit money into the account and “buy” shares in the mutual fund. It can all be done online.

IslamQA: Is it permissible to earn interest to give it away in charity?

Assalamualaikum, most reputable banks near me gives interest for a savings account, there are 2 Muslim banks but they don't have the best customer service reviews. I need to open a savings account but I don't want any Interest attached. A Muslim friend of mine with the same issue opened an account but records the amount of interest added each time and doesn't spend that amount. Is this allowed? Jzk

Alaikumassalam wa rahmatullah,

Why not just keep it in a checking account? Unfortunately even when keeping money in a checking account, we are still involved in usury because the bank uses the money to make interest-bearing loans to other customers. So ideally we should use Islamic banks if this option is available at all.

It is not considered a good thing to do anything that earns interest even if you give away the interest in charity. But if a person has no choice, then it is permitted to do so and give the money away.

Another option would be to keep the money in a mutual fund that earns money from Islamic bonds, such as the Azzad Wise Capital Fund (WISEX). This in general has higher earnings than savings accounts and helps fund halal projects, but it is slightly riskier, although nowhere as risky as investing in stocks. To invest in WISEX, you just need a free account from a site like TD Ameritrade, then you can deposit money into the account and “buy” shares in the mutual fund. It can all be done online.

References:

IslamQA: The income of a father who works in a usurious bank

Salaam. My father works in a bank, to which we all know that no bank is free from usury. When I have enough courage to tell him that his job involves usury, he made an excuse that it is totally fine. My question is, does this make his effort to make a living for the family haraam or will God Forgive him for trying to sustain his family?

Alaikumassalam wa rahmatullah,

It is your father’s duty to seek other employment. The money he earns is not entirely haram, it is a mix of halal and haram since the income of a bank comes from various sources, both halal and haram.

As for you benefiting from that money, according to a fatwa from the Qatari Fatwa Authority it is permitted for the child to benefit from such income since it is a mix of halal and haram. Benefiting from mixed parental income is not clearly forbidden in Islam, although you should try to encourage him to purify his income.

As for whether God accepts his excuses and forgives him, this depends on his intentions and his ability to find other jobs. If he prefers working at a bank because that is where he can make the most profit, then that is more morally condemnable than if he has no other job prospects.

Source: