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.
- Fatwa from the Qatari Fatwa Authority (Arabic PDF)