What is your opinion on Savings Account (Bank interest) in light of Islam?

[Mamoon]

Mods - merge this thread if required, but I couldn't find a relevant one.

I've been pondering about this for quite some time. I have a savings account but I am considering moving my savings to a current (interest free) account because almost all Islamic scholars are unanimous in their belief that savings account interest is haraam.

Does any have an alternative opinion on this? If no, how do you manage your savings?

I don't have a strong opinion on this because I don't have enough evidence to counter this belief, but I do have the following reservations that are open to scrutiny:

Firstly, the modern banking model is completely different from the core reasons for why interest was banned in Islam at the time of the Prophet. Interest back then was banned because it was taking advantage of, or exploiting a person in need. Someone needy is asking you to lend them 50k and you do so with the promise that you will charge 70k a year later. That person will most likely accept the deal if he is in a desperate situation today.

However, this clearly doesn't translate to modern savings accounts in commercial banks. They are financial institutions that are using your savings to make money and giving you a share of the profit.

Secondly, how do you safeguard yourself from currency devaluation if you are depositing your savings in an interest-free account. The money suspending in your account is losing value rapidly, much more rapidly than money lost value 1,400 years ago.

However, my conviction in my counter-argument is not strong enough for me to continue using a Savings account, but if anyone has any strong thoughts on why modern banking system cannot be considered haraam in the Islamic essence of interest, I would love to hear more about it.

There is also a school of thought that argues that interested earned on Savings account can be utilized for zakaat/charity, although the counter to this is that since the interest money does not belong to you, any zakaat/charity made on that money will not be accepted.

 

[Suleiman]

@LordJames @Justcrazy

 

[sweep_shot]

I do not give or receive interest.

I have a savings account but I asked my bank (TD Canada Trust) to remove interest from my savings account and they obliged. My savings account now has 0% interest rate.

 

[sweep_shot]

Surah Al-Baqarah, verse 275

 

[RexRex]

Are banks in Islamic countries banned from levying interest ? Why not ?

 

[Mamoon]

Surah Al-Baqarah, verse 275

View attachment 156016

Yes I am aware of these verses, but my question is why and how do they apply to modern commercial banking considering their model is completely different from the interest back then.

 

[DeadlyVenom]

Yes I am aware of these verses, but my question is why and how do they apply to modern commercial banking considering their model is completely different from the interest back then.

Ghamidi goes into this topic in detail from perspective that is different to the mainstream.

 

[FollowThru]

Mods - merge this thread if required, but I couldn't find a relevant one.

I've been pondering about this for quite some time. I have a savings account but I am considering moving my savings to a current (interest free) account because almost all Islamic scholars are unanimous in their belief that savings account interest is haraam.

Does any have an alternative opinion on this? If no, how do you manage your savings?

I don't have a strong opinion on this because I don't have enough evidence to counter this belief, but I do have the following reservations that are open to scrutiny:

Firstly, the modern banking model is completely different from the core reasons for why interest was banned in Islam at the time of the Prophet. Interest back then was banned because it was taking advantage of, or exploiting a person in need. Someone needy is asking you to lend them 50k and you do so with the promise that you will charge 70k a year later. That person will most likely accept the deal if he is in a desperate situation today.

However, this clearly doesn't translate to modern savings accounts in commercial banks. They are financial institutions that are using your savings to make money and giving you a share of the profit.

Secondly, how do you safeguard yourself from currency devaluation if you are depositing your savings in an interest-free account. The money suspending in your account is losing value rapidly, much more rapidly than money lost value 1,400 years ago.

However, my conviction in my counter-argument is not strong enough for me to continue using a Savings account, but if anyone has any strong thoughts on why modern banking system cannot be considered haraam in the Islamic essence of interest, I would love to hear more about it.

There is also a school of thought that argues that interested earned on Savings account can be utilized for zakaat/charity, although the counter to this is that since the interest money does not belong to you, any zakaat/charity made on that money will not be accepted.

Varying opinions from scholars in favour and also against the concept of interest and this discussion is like a never ending loop.

What I believe is the importance of Intent/Niyyat.

I ask myself just 1 question; If I am depositing cash with intent of utilizing my sources for some additional earning through interest.

"Yes" or "No". Therein lies the answer.

 

[Suleiman]

Ghamidi goes into this topic in detail from perspective that is different to the mainstream.

Seems like a very controversial figure, sometimes being different to the mainstream is not a good thing if it takes one away from the Quran and Sunnah and going against the interpretation of the major scholars and sahaba of history and present.

These types of “scholars” tend to attract Muslims who are sadly looking for loopholes to bend the Islamic rulings Nauzubillah and justify sin and “convenience”

The principles and regulations in the Quran and Sunnah are timeless unless stated in them otherwise (eg when alcohol was deemed fully unlawful compared to the earlier times)

No offense to him, but being unorthodox in terms of adherence to the deen is never a good sign.

Definitely someone I don’t trust

 

[sweep_shot]

Yes I am aware of these verses, but my question is why and how do they apply to modern commercial banking considering their model is completely different from the interest back then.

Islamic rules are timeless regarding this matter. That's the mainstream position.

 

[sweep_shot]

Seems like a very controversial figure, sometimes being different to the mainstream is not a good thing if it takes one away from the Quran and Sunnah and going against the interpretation of the major scholars and sahaba of history and present.

These types of “scholars” tend to attract Muslims who are sadly looking for loopholes to bend the Islamic rulings Nauzubillah and justify sin and “convenience”

The principles and regulations in the Quran and Sunnah are timeless unless stated in them otherwise (eg when alcohol was deemed fully unlawful compared to the earlier times)

No offense to him, but being unorthodox in terms of adherence to the deen is never a good sign.

Definitely someone I don’t trust

Agree.

I go with what majority of the Sunni scholars say. Vast majority say interest is haram. Their position is backed by Quran and Sunnah too.

 

[HalBass9]

Invest, take a risk.

 

[jaspa888]

My own position: look at the intention behind the ruling.

Lending money for interest is haram.

But if you deposit it in the bank, the bank will still use your deposit to earn interest by lending it to someone else for a higher interest rate (say, 5% interest). Whether you put it into a current account (earning 0% interest) or deposit account (say, 3% interest). By refusing interest, you are only making the banks more profit, not stopping the banks from charging interest.

 

[topspin]

This is what I do:

https://www.islamic-relief.org.uk/giving/islamic-giving/donate-interest-riba/?gad_source=1&gad_campaignid=12409770704&gbraid=0AAAAAD19lP_l5XEw8pYErMHocNSDfe9oh&gclid=EAIaIQobChMI49SyxMizjgMVvphQBh2I4yiBEAAYASAAEgJ3xvD_BwE

 

[Suleiman]

Seems like a very controversial figure, sometimes being different to the mainstream is not a good thing if it takes one away from the Quran and Sunnah and going against the interpretation of the major scholars and sahaba of history and present.

These types of “scholars” tend to attract Muslims who are sadly looking for loopholes to bend the Islamic rulings Nauzubillah and justify sin and “convenience”

The principles and regulations in the Quran and Sunnah are timeless unless stated in them otherwise (eg when alcohol was deemed fully unlawful compared to the earlier times)

No offense to him, but being unorthodox in terms of adherence to the deen is never a good sign.

Definitely someone I don’t trust

@DeadlyVenom btw not saying you do any of the above brother, just saying that’s the type of guy Ghamdi comes across as.

 

[Bhaijaan]

The ruling is clear. You’re not supposed to take interest. Plain and simple. Not abiding by it is Unislamic and as per Islam such Muslims will never be allowed in Jannat.

Of course most Muslims (99%) ignore such important foundational principles of Islam and live a Western, Sanatani lifestyle.

Just like the Airport has various lounges the divine has Jannat, Heaven and Swarg all located separately and giving entrance to eligible candidates from their religion. I’m not quite sure if you can apply for another once denied entry to one. There’s not much literature on that. So anyone planning to go to Islamic Jannat must live a true Islamic life.

 

[Kianig89]

Buy Assets Simple.

 

[BouncerGuy]

Keeping money in Banks is not profitable... Taxes, this and that.. Lots of issues there..

Instead buy gold, build assets.. That is more suitable... Interest is haram anyway.

 

[Suleiman]

The ruling is clear. You’re not supposed to take interest. Plain and simple. Not abiding by it is Unislamic and as per Islam such Muslims will never be allowed in Jannat.

Of course most Muslims (99%) ignore such important foundational principles of Islam and live a Western, Sanatani lifestyle.

Just like the Airport has various lounges the divine has Jannat, Heaven and Swarg all located separately and giving entrance to eligible candidates from their religion. I’m not quite sure if you can apply for another once denied entry to one. There’s not much literature on that. So anyone planning to go to Islamic Jannat must live a true Islamic life.

No matter how far a Muslim strays from the Islamic law, he or she will eventually enter heaven by either a) being forgiven by the mercy of Allah if they showed genuine remorse and tried to correct their action (Muslim bros correct me if there’s additional ways) or they may have to serve their sentence in hell for a time but after that they will still be granted entry into heaven.

A person who dies on Tawheed, true monotheism (belief in Allah / God alone) and acknowledges all the prophets up to the time they were alive in, will enter heaven eventually.

If one does not die on Tawheed, he or she will end up in hell no matter what.

And Allah knows best. May He forgive me if I misspoke or made error in detail

 

[DeadlyVenom]

@DeadlyVenom btw not saying you do any of the above brother, just saying that’s the type of guy Ghamdi comes across as.

It is worth listening to these people to gain wider perspective. Anyone who makes arguments from sources from within the religion is worth listening to. I don't listen to those that say that something should be rejected because it is old or because the world has moved on, but if they analyse the religion deeply before coming to a conclusion then I can respect it.

It is far too simplistic to say that the Qur'an and Sunnah are clear on certain points and that's the stance we take forever. Of course there are some things that are explicitly forbidden, you can't make any argument for Zina, Pork, Alcohol etc etc, but other areas are more delicate.

For example there was considerable scholarly consensus that photographs were shirk, or that videos were kufr, or that it would be haram for my mother to take a bus without my father to visit her sister who lived more than 40 miles away. Those that argued that those things were not haram would also have been accused of finding loopholes.

Interest is in a simar fashion. Yes it is forbidden in the general sense but we can study what was meant by interest to make rulings accordingly.

 

[Mamoon]

Ghamidi goes into this topic in detail from perspective that is different to the mainstream.

I support Ghamidi’s assertion that Prophet Isa (Jesus) is not coming back, but that is a debate for another day. However, I was surprised and maybe a little disappointed when Ghamidi too asserted that savings accounts are haraam. I was hoping for an alternative viewpoint from him but that wasn’t the case.

 

[Mamoon]

This is what I do:

https://www.islamic-relief.org.uk/giving/islamic-giving/donate-interest-riba/?gad_source=1&gad_campaignid=12409770704&gbraid=0AAAAAD19lP_l5XEw8pYErMHocNSDfe9oh&gclid=EAIaIQobChMI49SyxMizjgMVvphQBh2I4yiBEAAYASAAEgJ3xvD_BwE

I do the same, but then there are some scholars who hold the view that donating interest money will not be rewarded by the Almighty it is not money that you earned.

 

[Mamoon]

Buy Assets Simple.

Keeping money in Banks is not profitable... Taxes, this and that.. Lots of issues there..

Instead buy gold, build assets.. That is more suitable... Interest is haram anyway.

That is correct, but you still need liquid cash in hand. You will need at least some bank balance for emergency purposes. Can’t lock up all your money in assets.

 

[Mamoon]

It is worth listening to these people to gain wider perspective. Anyone who makes arguments from sources from within the religion is worth listening to. I don't listen to those that say that something should be rejected because it is old or because the world has moved on, but if they analyse the religion deeply before coming to a conclusion then I can respect it.

It is far too simplistic to say that the Qur'an and Sunnah are clear on certain points and that's the stance we take forever. Of course there are some things that are explicitly forbidden, you can't make any argument for Zina, Pork, Alcohol etc etc, but other areas are more delicate.

For example there was considerable scholarly consensus that photographs were shirk, or that videos were kufr, or that it would be haram for my mother to take a bus without my father to visit her sister who lived more than 40 miles away. Those that argued that those things were not haram would also have been accused of finding loopholes.

Interest is in a simar fashion. Yes it is forbidden in the general sense but we can study what was meant by interest to make rulings accordingly.

Agreed. There are more granular matters too, for example as per Islamic teachings, you cannot have any interaction with your brother’s wife. However, that is not compatible with today’s society. There are a plethora of other examples.

 

[IronShield]

My view is probably slightly controversial and just for debate... maybe the banks ought to link the interest if there is decrease in purchasing power from the time when you deposited money. Therefore, if say inflation is 5% now and year later it is 10%, maybe the interest can be paid to mitigate the loss of purchasing power in that year. So you are not "gaining" but recovering the loss of your purchasing power. If inflation drops then no interest is to be paid.

Sounds all great in theory but not sure how workable this would be in real life.

 

[RidiculousMan]

I believe the modern banking system is not compatible with Islam at all. The way the world economic works now. It totally prioritizes profit. Not only that but also of exploitative nature. Which Islam never puts ahead of social well-being of a society.

I don't have a savings account and would never have. I recommend a current account for day to day use.

As for savings. You can do your research and consider various options like Al Meezan Islamic Funds, certain mutual funds or just simply stocks. There are options of Gold and now with the emergence of Crypto Currency - Bitcoin.

Consider doing a venture with someone. Pool in money together and work. Or start a business.

The ultimate solution is to have a parallel world economic system of Islam. We have to try for it. For now, I'm okay with not taking interest as I care for life after death. I know I will get what's written for me at the end of the day. I just have to try.

 

[BouncerGuy]

That is correct, but you still need liquid cash in hand. You will need at least some bank balance for emergency purposes. Can’t lock up all your money in assets.

Gold is worth keeping.. Even more than cash... But yeah.. You do need money to pay for thing.

 

[Technics 1210]

Easy.

Don't save money with a bank, save it in bonds and PMs.

Use bank for day to day purchases.

 

[JaDed]

Can’t the interest be donated? Isn’t the first thing shouldn’t helping the needy.

Also you can put it in any bank they will use ur money for interest unless you are specifically choosing an Islamic bank that doesn’t charge interest.

 

[KingKhanWC]

Simple buy hard assets inc precious metals.

I advised posters on here when Gold was at $1600 per troy ounce, since it has doubled in price.

Paper money itself may be considered haram, its a scam nothing more.

 

[The Bald Eagle]

Wise advice

Simple buy hard assets inc precious metals.

I advised posters on here when Gold was at $1600 per troy ounce, since it has doubled in price.

Paper money itself may be considered haram, its a scam nothing more.

 

[Justcrazy]

@LordJames @Justcrazy

what is your question ?

 

[Suleiman]

what is your question ?

you and LJ are pretty well versed in Islamic law and applying Quran and Hadith to real world issues thought you may have some insight for OP

 

[Justcrazy]

you and LJ are pretty well versed in Islamic law and applying Quran and Hadith to real world issues thought you may have some insight for OP

I am not well versed like Lord James.
But I will give you my take on this whole matter.

First thing we have to understand that interest is strictly prohibited in Islam because there is explicit ayat in Quran as well as several hadeeth talking about its severity. So , no one can make it halal with fatwas because that would be clearly against Quran.

Now , first we must know that all these laws dictated by the Quran or hadeeth can be enforced only when you have power , that is khilafat . Unless Muslims have that , they will have several such issues, because they are living under legislative man made laws . man made laws are never going to be based on the Quran and hadeeth.

For example gambling , selling of pork , intoxicants etc are all haram in Islam but they bring more profit so , the legislature will not stop that. Man made laws look at worldly gains ONLY , they are not bothered about after life. So as a Muslim you are living in a society whose top roof is based on kufr , so there will always be issues.

The whole monetary system of the world is based on banking , there is no way till now that it can be eliminated.

When in the Days of Mecca the prophet prayed towards kaba , there were Idols there , he did not go and break them , why ? Because he did not have resources or power. Unless you have power , there is no way you can eliminate wrong.

If we look at the society properly there are many things which Muslims compromise upon because they live in a society which is run on Godless principles. For example women claiming property of husband after divorce , women studying with males or working with males etc Its not allowed , but still Muslims do that and are proud of there daughters and wives and sisters intermingling with opposite genders.

That is why I am so vocal about the Caliphate and Kingship issue. Its not just a word , it encompasses whole Islam. After Khilafat E Rashda , also , there were people praying and fasting etc and doing all those rituals , but the spirit of Islam was dead , only the body remained.

 

[ads101]

Don’t think interest in banks is unislamic. The rule against interest is to prevent people taking advantage of others via interest. You are not taking advantage of a bank by collecting interest. If anything the bank is taking advantage of you by you lending your money to them. That is why they provide a small compensation.

I see it more as cash being an asset. The bank is paying you for the privilege of using that asset to make more money. We wouldn’t see it as bad if for example one were to rent a property from a landlord.

Buying other assets as an alternative is often not too viable for those who are risk averse, need their cash more readily, or just simply poorer. Savings accounts provide a good service for people. Especially in a world where inflation is a genuine issue, savings accounts provide a needed service for people who are less inclined to invest in other assets whilst also needing something to aid against inflation.

Personally I think these laws are put in place for the protection of harm. Whether that is onto you or onto others. I think it’s very difficult to argue money earnt through interest in savings is harming any party. And even if I were against it, I’d much rather take the interest and donate it to charity, I think overall there would be more good done in the world than flat out refusing it.