Salam Mufti Saab,Was hoping you could help guide me in the right direction.
Question: When storing your money in a financial institution (checking/savings) there is a risk the bank can lose your money (bank failure); hence, the reason why they are FDIC insured up to $250,000 (2008 financial crisis, this week Dow dropped 800 points indicating possible recession, etc.).
Therefore, since there is a risk of losing money in a checking/savings account or any account for that matter; why is the stigma that savings accounts are haram even though you could earn a profit and have a risk of losing money (bank failure) that is stored in the account?
Jazakallah khair for all that you do!
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Respected brother,
We are having difficulty understanding your query. You refer to the checking /savings accounts being insured. You then refer to only the savings account and stigma of the savings accounts being haram.
Are you referring the stigma of haram to the savings account in relation to the checking account? You thus assume that the checking account is permissible and enquire the reason for the stigma of haram of the savings account.
Are we correct to understand that the common factor, and assumed by you in both accounts, is the fact that both accounts are FDIC insured, hence if the checking account is permissible, then why is the savings account haram?
At the outset, it should be pointed out that one may bank with a conventional bank due to the basic needs of banking which is fulfilled through the current account. It is not permissible to have a savings account in a conventional bank due to the interest factor involved in such an account.
The issue of FDIC insurance is not a consideration in regarding the current account permissible or savings account impermissible.
If your query is other than what we understood, you may revert to us with a clear detailed explanation without ambiguity as in your query.
And Allah Ta’āla Knows Best
Hasan Abdur Razzak
Student – Darul Iftaa
Paterson, New Jersey, USA
Checked and Approved by,
Mufti Ebrahim Desai.