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What to Do with Bank Interest Credited to Your Account

21 May, 2022
Q As-Salamu alaykum. I am working in a Govt. sector for the last three years, but I didn't care about the interest which was credited to my salary account and spent the salary including interest for different domestic purposes. What should I do in the future with the interest credited to my salary account and what about the interest that I already consumed? Can I distribute the interested money among the poor and the handicapped?

Answer

Wa `alaykum As-Salamu waRahmatullahi wa Barakatuh.

In the Name of Allah, Most Gracious, Most Merciful. 

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

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In this fatwa:

If there is interest credited to your account, you should dispose of it to the poor and needy because the haram is in earning it not in the corpus of the money credited.


Answering your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Bank transactions according to Islam

Most banks do not give interest on current accounts. Please be sure whether you salary account has in fact interest credited into it. If there is interest, it is not an earning for Muslims as Allah prohibited it in the Quran:

{But Allah has permitted trade and has forbidden interest.} (Al-Baqarah 2:275)

Interest that is prohibited is defined in the Quran itself:

{And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal – [thus] you do no wrong, nor are you wronged.} (Al-Baqarah 2:279)

What to do with bank interest

If there is interest credited to your account, you should dispose of it to the poor and needy because the haram is in earning it not in the corpus of the money credited.

Please be sure to distribute at least the exact amount of interest credited to your account to the poor and needy (not all handicapped are poor).

For the past, you should go back and also distribute the amounts credited in the past to the poor and needy.

Estimate that if you do not know the exact amount and to be on the safe side, add some more money, Allah knows it and will accept the extra as sadaqah (charity). But you should be keen to distribute the past earned interest that you unknowingly used because the Prophet (peace be upon him) told us that: “Every flesh raised on haram deserves best to be taken to the Hell Fire.” (Al-Bukhari)

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf
Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey