Earning interest in bank deposits

Question

Situation 1;
A person can keep a sum of money in bank in a special account frozen for a period of a year with rent percentage of for example 5 %
A other method is that this person can keep his money in a regular account for a rent percentage for 2,5 %
In this case which rent percentage should the person take, and give it thereafter to the poor ? Is it correct to say take as much as much rent to give it to the poor thereafter ?

Situation 2;
If a person can keep his money at a bank with 0 % rent, should he choose this rather then take rent and give it thereafter to the poor ?

Ml. Abrar Mirza · Accepted Answer

In the name of Allah, Most Gracious, Most Merciful

Assalaamu `alaykum waRahmatullahi Wabarakatuh

It is not permissible to earn interest on your bank deposits. Therefore, when a person has an option to deposit his money in an interest-free account, then it is impermissible for him to deposit it in an interest-bearing account [i].

However, if he does not the option of an interest-free account nor can he safeguard his money elsewhere such that he does not gain interest, then it will be permissible to deposit his money in an interest-bearing account [ii]. In such a case, the permissibility will only be to the extent of the necessity. Therefore, if one account pays 2.5% interest and another 5%, then he can only deposit his money in the account that pays the lesser amount, i.e. 2.5% [iii]. It is not permissible to take interest with the intention of giving it to the poor, nor is it permissible to take a higher interest rate with this intention [iv].

In principle, it is necessary to return the interest money to its original owner [v]. However, if this is not feasible, then one must donate the interest money to the poor without the intention of thawāb [iv].

[i]

[ii]

[iii]

[iv]

[v]

And Allah knows best

Ml. Abrar Mirza,

Student Darul Iftaa

Checked and Approved by:

Mufti Ebrahim Desai
Darul Iftaa

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