What is riba, in plain words?

Riba is an Arabic word. It means increase or growth. In Islam it means an extra that is not allowed, mostly the extra charged on a loan. In English we usually call it interest or usury.

Here is the simple test. You lend someone money. You ask for more back than you gave, because of the time they kept it. That extra is riba.

• You lend a friend 1,000 and say: pay me back 1,100 in a year. The extra 100 is riba.
• You lend 1,000 and say: pay me back 1,000, but add 20 for every month you are late. The 20 a month is riba.
• It does not matter if the extra is small, if the borrower agrees, or if both of you are happy. If the loan comes with a set extra, that extra is riba.

Allah says: Allah has allowed trade and forbidden riba¹. All Muslim scholars, in every age and every school, agree that riba is haram. Scholars do not differ on this.

What are the two kinds of riba?

Scholars put riba into two main kinds.

1. Riba on loans

This is the extra charged on a loan or a debt because of time. It is the riba the Arabs knew before Islam. When a debt was due, the lender would say: pay now, or pay more later. The debt grew and grew. Allah says: do not eat riba, doubled and doubled again².

At the Farewell Hajj, Nabi ﷺ said: all riba from before Islam is cancelled. You keep your capital (the money you first lent). Do not wrong others, and you will not be wronged. He also said the riba owed to his own uncle, Al-Abbas, is all cancelled³.

Almost all the riba in daily life today is this kind: interest on loans, cards and debts.

2. Riba when swapping the six things

Nabi ﷺ named six things: gold, silver, wheat, barley, dates and salt. He said they must be swapped like for like, equal for equal. Whoever gives more, or asks for more, has dealt in riba⁴.

The rules are easy once you see them in a table:

Better quality does not change the rule. Good dates for poor dates must still be equal amounts. That is the lesson of Bilal's dates, below.

Is it only these six?

Scholars agree the rule covers more than these six. They differ on the reason behind it, so they differ on what else it covers:

• Hanafis and Hanbalis: things sold by weight or by measure, like rice, flour or sugar.
• Shafi'is: gold and silver because they are money, and the other four because they are food.
• Malikis: gold and silver because they are money, and the others because they are basic foods that can be stored.

What matters most today: most scholars and the big fiqh councils say paper and digital money follow the same rule as gold and silver, because money is what people use to pay. So swapping money for money follows the same rules.

How serious is riba?

Very few sins get warnings as strong as riba.

• War from Allah. Allah tells the believers: fear Allah, and give up the riba people still owe you. If you do not, then know that Allah and His Messenger are at war with you⁸. No other sin in the Quran is described like this.
• Like someone touched by shaytan. Those who eat riba will stand on the Day of Judgement like someone driven mad by the touch of shaytan. That is because they said trade is just like riba⁹.
• One of the seven sins that destroy. Nabi ﷺ said: stay away from the seven sins that destroy. One he named was eating riba, next to shirk, magic, murder and eating an orphan's money¹⁰.
• Four people cursed. Nabi ﷺ cursed the one who takes riba, the one who pays it, the one who writes it, and its two witnesses. He said: they are all the same¹¹.
• A river of blood. In a dream, Nabi ﷺ saw a man in a river of blood. Each time he tried to get out, a stone was thrown into his mouth and he was pushed back. Nabi ﷺ was told: that is the one who ate riba¹².
• No blessing. Allah wipes out riba and makes charity grow¹³. Riba may look like growth, but it does not grow with Allah¹⁴. See why money never seems to last.

The ayat about riba were among the last parts of the Quran to come down¹⁵.

Why is trade different from riba?

The people of Makkah said: trade is just like riba. Allah answered them: Allah has allowed trade and forbidden riba¹⁶.

Both can end with more money. So what is the difference?

• In trade, you sell a real thing. You own it and you take the risk. It can lose value, or not sell at all. The profit is your reward for that risk.
• In riba, money is rented out for more money. The lender takes no risk. The extra is fixed and grows with time, whatever happens to the borrower.
• Riba hurts the weak. The person who needs to borrow pays more, and the person who already has money gets more.

Things people think are riba, but are not

• Profit in trade. Buying for 100 and selling for 150 is halal. Islam sets no limit on profit. Only lying, cheating and hiding faults are wrong (see Honest dealing, gambling and work).
• A higher price for paying in parts. A phone costs 600 cash, or 720 paid over a year. The four schools allow this if the price is fixed at the start and does not grow if you pay late. This is a sale, not a loan. More in Fair deals.
• Paying back more as a gift. If you choose to give back more than you borrowed, and it was never agreed, that is good. Nabi ﷺ paid back a better camel than the one he borrowed. He said: the best of you are those who pay back in the best way¹⁹²⁰.
• A fee for real work. A fair fee for a real service, like sending money or running an account, is not riba. But a fee that grows with the size of the loan and how long it lasts is just interest with another name.
• Sharing profit in a business. Putting money into a business and sharing the profit and the loss is halal. See Partnerships and running a business.

Where do you meet riba today?

In most countries, riba is part of normal life. Here are the common forms:

• Bank loans. Personal loans, car loans, student loans and normal mortgages, where you pay back more than you borrowed because of time. For homes, see Buying a home and Is a mortgage haram?.
• Credit card interest. If you do not pay the full balance, you pay interest on what is left. That interest is riba. Whether you may have a card you always pay in full is a separate question. It is in Credit cards, buy now pay later and loans.
• Payday loans and cash advance apps. Short loans with very high charges. This is riba, and often the most harmful kind.
• Late fees that grow with time. Most scholars and fiqh councils say a fee on a debt that goes up the longer you are late is riba. Allah teaches the opposite: if the person is struggling, give them time until things are easier²¹.
• Interest on savings. The interest a bank pays you is riba too, from the other side. What to do with it is below. Which accounts to use is in Banks, savings and Islamic banks.

A gift because of a loan

Many scholars say: any benefit the lender gets because of the loan, when it was agreed with the loan, is riba. People often quote this as a hadith, but as a hadith it is weak. Scholars still accept the rule because of other proof. The Companion Abdullah ibn Salam said: if someone owes you money and sends you a gift, even a load of straw or barley, do not take it, because it is riba²². A gift between people who always gave each other gifts is fine.

Is bank interest riba?

Some people say: the riba in the Quran was the cruel kind that crushed the poor. Bank interest is small, and both sides agree to it.

Almost all scholars today give a clear answer: bank interest is riba.

• A bank loan is a loan of money, paid back with a fixed extra because of time. That is exactly what riba is.
• Allah did not limit it to big or cruel riba. He said: give up whatever riba is left, and you keep your capital²³. Only the money you first lent is yours, not any extra.
• The big fiqh councils of the Muslim world have said so clearly. These include the International Islamic Fiqh Academy (of the OIC), the Fiqh Council of the Muslim World League and the Islamic Research Academy of Al-Azhar in 1965. Scholars from all four schools agree.
• Both sides agreeing does not change it. The people before Islam agreed to their riba too.

To be fair, here is the minority view. A small number of modern scholars, including a former head of Al-Azhar, said fixed returns from a bank are not the riba of the Quran. Their main reason: the bank invests the money, and the return is not taking advantage of anyone. Very few hold this view, and the fiqh councils did not accept it.

Living in a non-Muslim country. Abu Hanifa held that riba with non-Muslims in a land at war with Muslims is not counted as riba. A few people use this for Western banks. Most scholars, including most Hanafi scholars today, say it does not apply to normal banking in the West.

How do you change money the halal way?

Money follows the same rule as gold and silver. So changing currency follows the rule of the six things.

• Different currencies, like dollars for euros: you and the seller agree on any rate. But you must both hand over the money at the same time, in one sitting. Nabi ﷺ forbade selling silver for gold to be paid later²⁴.
• The same currency, like changing a 100 note for smaller notes: it must be equal. 100 for 100.
• Not allowed: I give you dollars today, and you give me pounds next week at today's rate. That is a delayed swap.
• Bank transfers and cards: most scholars today count a payment that goes through at once, or within the normal banking time, as hand to hand. A fair fee for sending money is a fee for a service, and it is allowed.

Forex trading is in Crypto, trading and new kinds of money.

Can you buy gold jewelry and pay monthly?

Many families ask this before a wedding: can I buy gold jewelry and pay monthly? Scholars differ.

• Most scholars: no. Gold is one of the six things, and money follows the rule of gold and silver. So when you buy gold with money, you must pay in full at the time, hand to hand²⁵²⁶. Nabi ﷺ even said the gold in a gold necklace with stones must be sold weight for weight²⁷. This is the main view of the four schools and of the big fiqh councils.
• Other scholars: yes. Ibn Taymiyyah and his student Ibn al-Qayyim said that once gold is made into jewelry, it becomes an ordinary product. It is no longer used as money. So you may buy it with money and pay in parts, like a phone. Some scholars today follow this view.

Real scholars hold both views. Follow a scholar you trust. If you want to stay clear of the difference, there are easy ways:

• Save first, then buy the gold and pay in full.
• Borrow the money from family with no extra. Pay the jeweler in full, then pay your family back monthly.
• Pay a deposit to hold the piece. Then take it and pay the rest on the same day.

You may owe zakat on gold you own. See Zakat on money, gold and business.

What do you do with interest you already got?

Maybe a savings account paid you interest. What now?

• If you did not know it was haram: Allah says: whoever gets the warning from his Lord and stops may keep what he got before²⁸. Many scholars say you may keep what you already used. See Doubtful things, need and mistakes.
• From now on, or if you knew: do not use the interest for yourself. Give it away to the poor or to something for the public, like a well or a hospital. Most scholars and fiqh councils say this.
• Do not give it hoping for reward. You give it away to clean your money. It is not sadaqah, because it was never yours. But Allah still rewards you for obeying Him and leaving the haram.
• Do not just leave it with the bank. Many scholars say: take it out and give it away.
• If a person owes you interest: take back only what you lent. If you repent, you keep your capital. Do not wrong others, and you will not be wronged²⁹.

Interest is not your money, so you cannot use it to pay your zakat.

What if you owe interest now?

Many Muslims have a loan, a card balance or a mortgage with interest. Some took it before they knew. Some knew and did it anyway. If that is you, do not lose hope. Allah says: O My servants who have wronged themselves, do not lose hope in Allah's mercy. Allah forgives all sins³⁰.

A real way out

• Repent. Feel sorry, ask Allah to forgive you, and decide not to go back to it.
• Take no new interest debt. Stop the problem from growing. Cut up the card if you need to.
• Keep paying what you owe. You made a promise, and the law holds you to it. If you stop paying, you face more harm and more interest. The sin was taking the loan. Paying it off is how you get out.
• Pay it off as fast as you can. Pay the debt with the highest interest first. Pay early if you can, so you pay less interest in total.
• Look for a halal way to move the debt. Family may lend you the money with no extra. In some places, Islamic finance companies can take over the debt. Talk to a qualified adviser before you change any loan.
• Make dua. In his salah, Nabi ﷺ asked Allah to protect him from sin and from heavy debt³¹. See Duas and How to get out of debt as a Muslim.

Your house, your car or your degree is not haram because of the loan. The sin is the riba deal, not the thing you bought. And Allah forgives the sin when you repent.

There is more on debt in Debt and lending.

Common questions

My friend borrowed 500 and I asked for 550 back. He agreed. Is that okay?

No. Any extra agreed as part of a loan is riba, even if he agrees. Take back only the 500. If he chooses to give more as a thank you, and you never agreed on it, that is fine³².

I work in a bank. Is my job haram?

Jobs that mainly write, arrange or witness interest loans fall under the hadith of the four who are cursed³³. Scholars differ on jobs with only a small link, like cleaning or IT. See Honest dealing, gambling and work, and ask a scholar you trust.

A shop sells a TV for 500 cash or 600 over 12 months. Is the 600 riba?

No, if the price is fixed when you buy and does not grow if you pay late. That is buying on credit, and the four schools allow it. If there is a late fee that grows, that part is a problem.

Can I change money at the airport?

Yes. You may change one currency for another at any rate you agree, as long as both sides hand over the money then and there.

I am a student. Is a student loan with interest allowed?

A loan with interest is riba. Some scholars allow it only in real need, when there is no other way to study what you truly need. First look for grants, interest-free loans, help from family, and work. Some governments give loans with no real interest, only a rise to match inflation. Scholars differ on those. See Credit cards, buy now pay later and loans.

I am a new Muslim with a mortgage and a car loan. Is my Islam spoiled?

No. Islam wipes out what came before it³⁴. Keep paying your debts, take no new interest, and pay them off when you can. Your home is not haram.