Let's Understand Islam - Taking Interest on Interest

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Taking Interest on Interest

Written by Abu Mamoon Ahmad Abdul Rahman ibn Azizur Rahman

May
06

Most people who read the title of this post will have already misunderstood what I mean...

Definition:
1st "interest": a sense of concern with and curiosity about someone or something;
2nd "interest": the fee paid to borrow money

Now that I'm sure we are all understanding the topic at hand, do you take any interest regarding interest? Almost every Muslim will tell you that interest is Haram, and rightfully so, since it is clearly stated by Allah (SWT) in the Holy Quran in Sura Al-Baqarah in the following Ayats:

2.278 . O ye who believe! Observe your duty to Allah , and give up what remaineth ( due to you ) from usury , if ye are ( in truth ) believers
2.279 . And if ye do not , then be warned of war ( against you ) from Allah and His messenger . And if ye repent , then ye have your principal ( without interest ) . Wrong not , and ye shall not be wronged.

The term “usury” is translated in common discussions as interest. However, when I looked up usury on www.dictionary.com 2 things surprised me.

Before the definition is an ad… the first of two ads is for a bank. How ironic ;)
3 definitions are provided as below. Note the term “Obsolete” on the third definition.
a. the lending or practice of lending money at an exorbitant interest.
b. an exorbitant amount or rate of interest, esp. in excess of the legal rate.
c. Obsolete. interest paid for the use of money.

The only reason it’s likely marked obsolete is because today’s world is drowning in usury/interest. So much so that it’s next to impossible to find a penny which hasn’t been involved with interest. Looking at the definition of a. and b. both use the term "exorbitant". The problem with this type of definition is that its relative. What you consider a high interest rate may not be so high for someone else. This is where man made laws show their faults. Allah (SWT) has made it so easy, so simple. He has clearly told us that the "obsolete" definition above, making money on money, is Haram. No if, and's or but's. It doesn't matter if you pay $200 interest, or if you pay $0.01 in interest. You have paid, or taken interest. That's it. Trying to complicate matters by messing around with terminology and confusing people into believing interest is somehow acceptable is, in my opinion, worse than just dealing with interest. You are not only making something Haram Halal, you are encouraging others to get involved. More importantly, Allah (SWT) has already told us of the baseless arguments which people will put forth in Sura Al-Baqarah Ayat 275: "... that is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury...".

Allah (SWT) has given us a perfect manual to live life perfectly. He even included a demo "video". The manual I am referring to is the Holy Quran which describes without any flaw how to live life perfectly. Not just as an individual, not just as a locality, not just as a region, but rather as a global community. The demo is our beloved prophet, the seal of prophets, Mohammad (pbuh). He lived life inspired by the words of God and as a result, his life was the ideal, perfect life. No human to date has, nor ever will, be able to even come close to the perfection of life as did our Holy prophet Mohammad (pbuh).

I recently went to an Islamic Finance seminar where the speaker asked the small audience "does everyone know what GIC's, Mutual Funds, Stocks and (something else I can't remember) are?". Everyone acknowledged they knew. Somewhat hesitantly I raised my hand and said "I have no idea how they work". To which the speaker smirked and I think I may have even heard a chuckle or two from behind me. At this point just as the speaker took a deep breath to start his explanation, I interrupted and proudly said "the reason I don't know what GIC's etc. are, is because it has always been my understanding that they involve interest, which makes them Haram. So I have no reason to have any knowledge regarding what I don't want". I often draw a parallel chicken and interest. I know its been done by so many people, but I think I look at it from a different prespective. If I were to ask you what grocery store has the cheapest chicken legs on sale this week and at what price, would you be able to answer that? I'm not asking Halal or Haram chicken. Hopefully you can't answer the question because you have never considered purchasing Haram chicken, so you have never bothered to look at the prices. Everyone usually answers by telling me that the Haram chicken is cheaper. But the question is what is the price difference? So similarily you shouldn't know what the interest rate is on a 5 year mortgage. You shouldn't know what the interest rate is on a personal line of credit. It's unfortunately how many Muslims today keep themselves informated of the latest interest rate announcements and sadly start calculating how it will affect their financial situation.

My dear Muslim brothers and sisters... Allah (SWT), who speaks only Haq, the Truth, is giving us a dire warning: "then be warned of war ( against you ) from Allah and His messenger ". I cannot find the source, but I believe there is a hadith which confirms that this is a literal war whereby the angels will give you arms (weapons) and say, go and fight with Allah (SWT) and his final messenger (pbuh). Speaking for myself, I know I have difficulty walking by a small group of rowdy looking youth... I don't even want to try to imagine this situation.

When I went for Hajj in December 2006, when we were in Madina one of my roommates was the Imam. Prior to his coming to the room, we (the roommates) were having a lengthy discussion on “Islamic Financing” (let’s save this topic for another day). After a while the Imam came to the room and we tried to get his learned opinion. He was tired and after a short discussion, he says “I don’t even know if my Hajj will be accepted by Allah (SWT), I came to Hajj on a plane made by interest money”. We all had a good chuckle at this comment, but how sad is it that it is true.

In future posts Inshallah I will try to discuss more thoughts about interest and why we should stay away from it, and perhaps some ideas on how to keep it out of our lives.

May Allah (SWT) save us from the evil designs and whispers of Shaytan and save us all from the evil of interest and make us amongst the pious believers who are successful in this world and the next.

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