Riba - Donate your interest

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.

What is considered Riba in Islam?

In Islam, Riba is interest gained or paid on transactions or savings. This includes:

• Any 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

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.

What is difference between Riba and 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.

Why Riba is prohibited in Islam?

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 are 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.

Islam instead encourages non-interest based giving, charity and long-term investments for the benefit of others such as Sadaqah Jariyah and Waqf projects.

Zakat also ensures a social-security net for people in need.