Answered by Shaykh Faraz Rabbani
I currently have some money saved for the purpose of buying a house, which is in a low interest (current) account. Now I noticed that certain Islamic charities now accept interest money for use as they feel is appropriate, would it be worthwhile me transferring my money to a high interest account in order to accumulate much larger amounts of money and then donate this to such charities (I understand that this would not be ‘rewarded’).
Walaikum assalam,
In the Name of Allah, Most Compassionate, Most Merciful,
There are a few important points here:
1. Giving and taking interest are both decisively impermissible in Islam.
2. Given this, the default is that it is impermissible to have any kinds of interest-bearing accounts. Many banks provide zero interest current accounts. If these are available where you are, it would not be permissible to get an interest-bearing account, even “low interest.” Given the need to safeguard money and the unavoidable need to engage in financial transactions, the jurists of our age have given a dispensation for low interest current accounts if the abovementioned type are not available.
3. When you deposit money in the bank, the interest they give you is not your property, Islamically. The default would have been to actually return it to its rightful owners. Given that this is not possible, we are legally obliged to effectively return it to them by giving it away in charity, so that even though their money does not go back to them its benefit does in the form of the benefit of charity given on their behalf.
It is only charity, however, with regards to the actual owners of the money. When you give this money away, you can only intend to get rid of unlawful filthy money from your holding, while repenting and seeking Allah’s forgiveness for disobeying Him in a matter He deems most hateful. To seek ‘good’ or reward when one gets rid of this money would be a serious sin in itself, the fuqaha tell us.
One may either give this money to those deserving of zakat (=the poor and needy), or to charities. There is nothing wrong or dubious with accepting this money, because the sin devolves back to the person who wrongful engaged in the unlawful transaction and not the actual money itself.
[Sources: al-Hadhrwa’lIbaha of al-Nahlawi, al-Fatawa al-Hindiyya, Ibn Abidin’s Radd al-Muhtar, and Ahsan al-Fatawa, with some details from questions asked of Mufti Mahmoud Ashraf Usmani]
One final point I know a close colleague of mine who uses the interest he possess to pay the council tax bill, which according to his reasoning is o.k. because it for the ‘general good’ and therefore does not benefit him directly.
Absolutely not, for the reasons mentioned above.
And Allah alone gives success.
Wassalam,
Faraz Rabbani.