Why is Interest Haram in Islam? Find Out Now
The Arabic word riba means “to rise” or “to go beyond,” and it is often used to talk about unfair trades or fees and charges for borrowing. Islamic law says that taking advantage of others for personal gain, or riba, is wrong and illegal.
In Islam, it is illegal to both get and give interest (riba). A lot of us can get interest on our bank accounts even if we don’t want it. What should we do with it?
We should give riba to charities like SPAR instead of using it for our own benefit since that is against the rules. It doesn’t give you any religious benefits, but it gets rid of the haram money in a way that is in line with Shariah.
What Does Islam Mean By Riba?
As a Muslim, you can earn or pay riba on purchases or savings. Among these are:
- Any interest that is made on savings accounts, ISAs, and other investments that are used to save money
- When you lend money, property, or things, you get interest.
- Money is paid each month for interest on loans, credit card fees, or mortgages.
To give riba to charity, you would have to give the amount of interest you made, like the money you saved on interest.
Why Is Taking Interest Wrong?
In Islam, riba is when you add something extra to certain goods, like selling gold for gold, not getting something when you sign a contract, or paying more to get a loan extended.
This is banned by Allah, who rules as He pleases. It is only He who will ask people what they did on the Day of the Resurrection. No one else can ask Him about what He does. The verses (meanings) describe why riba is wrong and warn those who don’t give it up:
“O you who believe! Be afraid of Allah and give up what remains (due to you) from riba (usury) (from now onward), if you are (really) believers. And if you do not do it, then take notice of war from Allah and His Messenger . . .” [al-Baqarah 2:278-279]
What Should You Do With The Money You Get From Interest?
Ideally, we should avoid spending money on or doing things based on our interests. However, this might not always be possible.
This way, you can keep track of any interest you earn and give the money to charity in accordance with Shariah (for halal reasons).
FAQ
What Is Interest Riba?
Interest, also called riba in Arabic, is the extra money paid when you borrow or lend money. For example, if you borrow $100 and have to pay back $110, the extra $10 is interest.
Why Is Interest Haram In Islam?
Interest is considered haram (forbidden) in Islam because it leads to unfairness. The person lending the money gets more than what they gave, while the borrower has to pay back more than they received, often making the rich richer and the poor poorer.
Is All Interest Haram?
Yes, in Islamic teachings, all forms of interest are haram. Whether it’s a small or large amount, charging or receiving interest is forbidden.
Can I Take A Loan With Interest If I Need It?
While it’s always best to avoid interest, in extreme cases where there is no other option, some scholars say taking a loan with interest is acceptable. However, it’s important to first try to find halal (permissible) alternatives.
Are There Any Alternatives To Interest-Based Loans?
Yes, in Islam, there are alternatives like Islamic banking, which follows the rules of Shariah law. Instead of charging interest, they use methods like profit-sharing or renting, which are halal and fair to both sides.
Conclusion
In Islam, interest, or riba, is considered haram because it creates unfairness and takes advantage of others. Both receiving and giving interest are prohibited. Muslims are encouraged to avoid any dealings with interest, but if earned unintentionally, they should donate it to charity without seeking personal gain.
Alternatives like Islamic banking offer ways to avoid riba by using halal methods. By following these principles, Muslims can lead a halal life, avoiding haram and ensuring their wealth is earned through ethical means that benefit both individuals and the community.
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