Riba in Islam Donate Your Interest Now
Riba is when someone lends money and expects to receive more in return just for lending it — not for taking any risk or adding any real value. In Islam, wealth should be earned through effort, trade, or risk-sharing, not simply by charging people extra because they’re in need. It’s about fairness and compassion — helping others without taking advantage of their circumstances.
Qur’an Prohibition: Riba is condemned in multiple verses, including Surah Al-Baqarah (2:275–279).
Two Types:
Riba al-Nasiah – interest on loans.
Riba al-Fadl – unfair exchanges in trade (e.g., unequal barter).
Ethical Reason: It promotes greed and deepens inequality.
Understanding the Difference Between Riba and Murabaha
Murabaha is a Sharia-compliant financial method often described as “cost-plus” financing. In this arrangement, the seller discloses the original cost of an asset and adds an agreed profit margin, which the buyer consents to pay. This agreed-upon markup replaces conventional interest.
Unlike interest-based loans (riba), Murabaha is structured as a sale transaction, not a loan. It is considered permissible in Islamic finance because the profit is tied to the sale of a real asset rather than money lending. Ownership of the asset typically transfers to the buyer only after the full amount is paid—similar to rent-to-own models.
On the other hand, Riba, commonly translated as interest or usury, is strictly prohibited in Islam. While making a profit on a sale is allowed, earning profit through lending money with interest is not.
Riba—commonly understood as interest—is prohibited in Islam because it leads to injustice, exploitation, and social imbalance. In a system where money grows simply by lending it, the wealthy continue to get richer without doing any real work, while those in need are often trapped in cycles of debt and hardship.
Islam encourages fairness and shared risk. When people invest or trade, they do so with effort, transparency, and mutual benefit. But riba removes that balance—one side benefits regardless of the outcome, and the other bears all the risk.
The Qur’an strongly warns against riba, not just as an economic issue, but as a moral one. It’s seen as harmful to society because it prioritizes profit over people and turns compassion into opportunity for gain. That’s why Islamic finance promotes ethical alternatives—like profit-sharing, trade, and partnerships—that build communities instead of burdening them.
In today’s financial landscape, Riba—often translated as interest—can be found in several widely used services and products:
a. Interest-Based Loans
Many traditional loans offered by banks, whether for personal use, education, or buying a home, involve paying back more than was borrowed. This additional payment, based on a fixed or variable rate, is considered Riba under Islamic law.
b. Credit Card Debt
Most standard credit cards apply interest charges on outstanding balances after a grace period. These charges are another example of Riba. In response, Islamic financial institutions have introduced Shariah-compliant credit cards that use fixed service fees instead of interest.
c. Interest-Bearing Accounts and Bonds
Standard savings accounts often come with fixed interest earnings, and many bonds—issued by governments or companies—offer returns in the form of interest payments. Both fall under the category of Riba. In contrast, Islamic finance provides ethical alternatives such as Mudarabah-based savings (profit-sharing) and Sukuk, which are structured to generate profit without violating Islamic principles.
The Qur’an strongly condemns riba (interest or usury), urging believers to completely avoid it. Allah says:
“O you who believe! Be mindful of Allah and give up whatever remains of interest, if you are true believers.”
(Surah Al-Baqarah 2:278)
“And if you do not, then be informed of a war from Allah and His Messenger. But if you repent, you may have your principal—neither inflicting nor suffering harm.”
(Surah Al-Baqarah 2:279)
These verses make clear that engaging in riba is a serious offense in Islam, and repentance involves returning only the original amount lent—without excess.
The Prophet Muhammad ﷺ also issued stern warnings against riba. In a hadith recorded in Sahih Muslim:
“The Messenger of Allah cursed the one who consumes riba, the one who pays it, the one who records it, and the two witnesses to it, and he said: ‘They are all the same (in sin).’”
(Sahih Muslim)
Another narration highlights the pervasiveness of riba:
“A time will certainly come upon mankind when everyone will consume riba, and if he does not do so, its dust will still reach him.”
(Musnad Ahmad)
Is There a Difference Between Interest and Usury in Islam?
In many modern financial systems, usury refers to charging extremely high rates of interest—such as what’s commonly seen with payday loan providers. However, in Islam, there is no separation between “interest” and “usury.” Both fall under the umbrella of riba and are strictly forbidden.
Some modern thinkers suggest that small or low-interest rates should be acceptable, arguing that such charges don’t amount to exploitation. But this view doesn’t align with what the Qur’an explicitly states. The Qur’anic prohibition of riba is absolute; it does not differentiate between amounts or circumstances. There’s no exemption based on whether someone can afford to repay or not.
Furthermore, historical evidence from both the pre-Islamic and early Islamic periods shows that the concept of riba was not limited to excessive interest. Loans at that time were often tied to business deals and commercial gain, indicating that even moderate interest was considered problematic.
In today’s banking system, even though interest might seem modest or regulated, the broader structure still leads to economic exploitation—though in a more systemic and less obvious way compared to high-interest lenders.
As Imam al-Qarafi once noted, Islamic rulings intended to protect society remain in effect regardless of whether people currently perceive the harm. Just as alcohol remains haram despite someone claiming it doesn’t affect them, and zina is still prohibited even if someone is willing, whilst riba remains forbidden, no matter how normalized or “harmless” it may appear.
If you’ve accumulated interest earnings, it’s essential to remove them from your wealth in a way that aligns with Islamic principles. One way to do this is by donating that amount to Children Of Adam. This not only helps free your income from impermissible sources, but also allows those funds to be used for supporting vital humanitarian efforts.
While giving interest money doesn’t carry the reward of traditional charity (sadaqah), it is hoped that Allah (SWT) will bless you for making the sincere effort to purify your wealth and uphold the values of halal income.
