Can I open a bank account that gives interest? What if I give the interest away in charity?

Short Answer

You should open an interest-free account so you do not get any interest income. If no account like that is available, then choose the one with the least interest, and dispose of the interest accrued by giving it away in charity whenever you get it with no expectation of any reward.

Reason for Asking the Question

Bank accounts are generally needed by people to store and transact with their money but they often pay interest to the owner of the account and the funds deposited are actually used by the bank to loan out money to others. The questioner wants to know whether using a bank account is allowed as an exception to the general prohibition on interest.

Advice

Accounts that give no interest, or the lowest interest, like checking accounts, prevent the bank from giving out more interest loans, like savings and CD accounts. Muslims must opt to use these so you do not fuel the interest-based economic system more than you have to, despite the need. If you do not have access to the interest funds immediately, use your own liquid funds to give that money away in charity and keep a record that the interest has been purified from your account.

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Shaykh Mustafa Umar