Why is Interest forbidden in Islam?

"If his wealth decreases he doesn't become depressed by that, and if it increases, he doesn't get delighted by that, and he doesn't hate to die because of being separated from his wealth"  

then he is a Zahid - Sufyan b. Uyaynah. 

A Zahid is a pious ascetic who lives a simple life. He abstains from indulging the comforts and luxuries of life for the want of spending most of his time in Allah's worship and doing good to people. Allah says, "So as for he who transgressed and preferred the life of the world, then indeed, Hellfire will be [his] refuge. But as for he who feared the position of his Lord and prevented the soul from [unlawful] inclination, then indeed, Paradise will be [his] refuge." [Qur'an, 79:37-41]

Can anyone today say that they can live without wealth? That they wouldn't care if they had a lot of wealth or very little of it, it's all the same to them? Interest based economy breeds reckless and untrammeled greed. In fact, in an interest based economy, human value becomes contingent to his possessions. The more you own (drive, wear, buy and eat) the loftier your status in society. What about people who cannot afford to buy foreign cars, or the latest designer clothes and dine in fancy restaurants? They must take interest of course! An average Canadian family is $96,000 in debt for borrowing money from the government who in turn, charges them with interest on every dollar it lends to them. So people already don't have any money in the first place to pay the original borrowed amount, but because of interest, they are charged with extra money to pay for the money they don't have money for. Make sense? Me neither.

Think of it this way. I don't have any apples so I ask you for 2 of yours. You give me 2 but on each apple you give me, I owe you 3 apples in return, with every day that I don't return the apples back to you. So if I am late in my payment by just 1 day, I owe you 2x3 apples. Now, why did I borrow apples from you in the first place? Because I didn't have any, remember? Now if I don't have any apples to begin with, and it is hard for me to acquire them on my own - how can I realistically pay you back the apples you lent me plus the additional apples you are charging me on interest? The interest based economy system is designed to enslave people into an everlasting cycle of debt. No matter how much the people work, because their debt is perpetual, they can almost never pay it off. Every time they make a payment, their debt increases by a certain percent and they just end up paying more.

Take OSAP loans as another example. If you borrow money from the government to pay for your university tuition - $528 per course. Each year, you take 8 courses and you study for a total of 4 years. By the time you graduate, you owe the government approximately $16,896.  If you do not return the government this amount within 6 months of your graduation, every month you owe the government on additional 5% more on the principal amount. So with each passing month, you owe the government $16,896 (principal amount) + $800 (interest). If you are only earning $500-$1,000 a month, then in how many years would you expect to be pay off your loan and debt? Keep in mind that you must also pay for your rent, food, clothes, gas and if you decide to get married and have children, then you must pay for that too.

Who invented interest and why?  

Ultimately, the banks cash in every time we need to buy something we don't have money to pay for. We loose out because we end up paying interest on every loan for over 10 - 25 years. This phenomena has created two extremes in the West, one of shopaholics and the other of money obsessed people. 

Compulsive spenders pay whatever it takes to get whatever they want. With the easy availability of credit cards, they have no sense of control over money. Just swipe a card and you can get a trolley full of junk you don't need. There is no actual exchange of money so the shoppers do not feel like they are paying for their purchases. It's all magic! Coupled with the bombardment of ads for things on television, the shopping addiction becomes a disorder. Ads preach that things can buy us happiness, love, acceptance and power. All our troubles, doubts and disappointments will be pushed away if we shopped. Result? We shop all the time, every mood swing hauls us to the mall. We feel euphoria when we are buying things and irritable when we are not. We spend hours flipping through store catalogues and shopping channels. We just have to have everything in season, everything on sale, everything our friends have and everything our celeb idols have.

Then there is another extreme, money paranoia or money obsession. Some people just live and work for money so they could reserve it. They are fixated about checking their bank statements daily. They don't spend a dime on their family or relatives, even on special occasions. They don't use heating during winter or shower much during the summer to keep their utility bills to a minimum.  They take receipts of every purchase and recalculate them once they get home. It infuriates them if someone asks to borrow money from them. They hoard all types of things; rarely getting rid of anything, even if they haven't used it in the last twenty years. It's wise to be thrifty but stinginess and greed are mental illnesses.

So what if people shop a little extra and some people not at all? Does it make a difference? It creates a wide disparity between the rich and poor. What do you think happens when people go broke and desperate? What about when people don't want to work but still want to get rich fast anyway? According to crime statistics, United States is the first country in the world for highest crime next to United Kingdom. In America, the crime clock continues to click: one murder every 22 minutes, one rape every 5 minutes, one robbery every 49 seconds, and one burglary every 10 seconds. Approximately one in every 18 men in the United States is behind bars (that's 754 persons in prison per 100,000 U.S. resident).  

How do we get out of this interest based economic and social disaster? Simple - do what the Qur'an says.  Allah revealed 1400 years ago,

الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذَ‌ٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا فَمَن جَاءَهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ وَمَنْ عَادَ فَأُولَـٰئِكَ أَصْحَابُ النَّارِ هُمْ فِيهَا خَالِدُونَ

وَاللَّهُ لَا يُحِبُّ كُلَّ كَفَّارٍ أَثِيمٍ
إِنَّ الَّذِينَ آمَنُوا وَعَمِلُوا الصَّالِحَاتِ وَأَقَامُوا الصَّلَاةَ وَآتَوُا الزَّكَاةَ لَهُمْ أَجْرُهُمْ عِندَ رَبِّهِمْ وَلَا خَوْفٌ عَلَيْهِمْ وَلَا هُمْ يَحْزَنُونَ

"Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allāh has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allāh. But whoever returns to [dealing in interest or usury] – those are the companions of the Fire; they will abide eternally therein. Allāh destroys interest and gives increase for charities. And Allāh does not like every sinning disbeliever. Indeed, those who believe and do righteous deeds and establish prayer and give zakāh will have their reward with their Lord, and there will be no fear concerning them, nor will they grieve." - 

[Qur'an, 2:275-277]

الرِّبَا or interest, is every loan that yields a profit. 

Allah says, every person who takes or pays interest will stand on the Day of Judgment as though Shaytan has possessed him and beaten him senseless. Harsh? Not really. How do people with compulsive shopping disorder or money paranoia behave? Have you ever seen a child freaking out to buy a toy? It will throw a fit right in the middle of the shop, curse, wail and kick to get what he/she wants. When the same child grows up, he/she remains equally frenzied over buying a dress, a house or a car. It's like they are demented in their craze for buying. They would lose sleep, food and family to work profuse hours to earn plentiful money to buy more and more. Now there is nothing wrong with buying things you need but buying things you don't have the money to pay for, is wide of the mark. You can blame the TV commercials for pumping people with extravagance and hedonism but that doesn't solve the problem. So long as there is interest, the devil of greed and lust will continue to consume our lives. 


The best solution is to abolish interest all together. Interest is an abomination anyway, prohibited and cursed by Allah. 

Trade based Economy	Interest based Economy
Requires resources, effort, intelligence and time to build a run a business.	Only requires resources. So long as you have money, there is no need for you to work hard for spend any time - just lend you money on high interest to people and sit at home and receive profit.
Is risky, profit is unpredictable and may incur loss.	No risks involved, profit is guaranteed and no chances of loss. The people indebted to you are your slaves and you preside their life.
Transaction is instant.	Transaction may drag for decades because of self generating interest/debt.
Makes people rational and moderate. They are careful with money because they know how hard it is to earn it so they only buy the things that they need and can afford. They are also happy with what they have.	Makes people irrational and unbalanced. They are reckless and don't really care about money when they can buy everything on interest. They are unhappy in life because they have many things that they do not need and too much debt they cannot pay.
Creates compassion, people realize how hard it is to hold a steady job and save enough money to satisfy minimum necessities so they give more in charity.	Creates cruelty, people are too much in debt to care for anyone else. They blame poverty not on society but on the individual for not overworking as they do and obsessing buying things on interest as they are.
Foster asceticism, humility and cooperation.	Fosters voluptuousness, arrogance  and crime.
The benefit is mutual, both the vendor and customer profit, the vendor got the price of his product and the customer receives what he paid for.	Transaction is miserable, only the vendor benefits as he gets the price for his product and more. While the customer incurs tremendous loss because he pays 10-100x more on the product than it is actually worth because of interest.
Encourages creation of jobs, constructive work, productivity, equal distribution of wealth, resources and services in society.	Encourages bureaucracy and thug mentality. People who own a lot of wealth also control the society's resources, services and people who all slave for their self-interest.

Interest based economies collapse every few years (take the 2008 recession) for example. Interest based economies are meant to self-destruct and destroy billions of people's lives in the process. The Islamic society is based on charity, mutual support and well-wishing. The Prophet Muhammad (s.a.w) likened the Muslim community to the human body, which works together as a system. Together, we can get rid of the interest based economy by establishing and promoting charitable organizations and businesses that lend interest-free loans. 
In fact the quality of Muslims is that they establish Salah and they give in charity. Allah says, "The believers are only those who, when Allāh is mentioned, their hearts become fearful, and when His verses are recited to them, it increases them in faith; and upon their Lord they rely – The ones who establish prayer, and from what We have provided them, they spend. Those are the believers, truly. For them are degrees [of high position] with their Lord and forgiveness and noble provision." [Qur'an 3:2-4] In Islam, a person achieves true piety by giving in charity, "Never will you attain the good [reward] until you spend [in the way of Allāh] from that which you love. And whatever you spend – indeed, Allāh is Knowing of it." [Qur'an, 3:92] Giving in charity is a means of atonement of sins, purification of the soul and the pleasure and reward of Allah. Allah says, "So fear Allāh as much as you are able and listen and obey and spend [in the way of Allāh]; it is better for your selves. And whoever is protected from the stinginess of his soul – it is those who will be the successful. If you loan Allāh a goodly loan, He will multiply it for you and forgive you. And Allāh is Most Appreciative and Forbearing." [Qur'an, 64:17]  and "So give the relative his right, as well as the needy and the traveler. That is best for those who desire the countenance of Allāh, and it is they who will be the successful. And whatever you give for interest to increase within the wealth of people will not increase with Allāh. But what you give in zakāh, desiring the countenance of Allāh – those are the multipliers." [Qur'an, 30:38-39] 


The Prophet Muhammad (s.a.w) said,

• Charity cool the anger of Allah and save one from a painful death (Ahmed)
• Charity will shade the Muslims on the Day of Judgment (Ahmad)
• Charity will shield the Muslims from hellfire (Tabrani)
• Whoever clothes a destitute person, Allah will adorn with silk green garments in Paradise. Whoever feeds a hungry person, Allah will lavish him with fruits of Paradise. Whoever gives water to a thirsty person, Allah will entertain him with springs and wines of Paradise (Abu Dawood & Tirmidhi)

It is no surprise then that the companions (r.a) would prefer to give in charity even when they were in dire need. Take fore example, Abu Talha (r.a) who pledged his orchard and his house to the Muslim community. AbdurRahman bin Awf (r.a) donated his business convoy of 700 camels, each laden with profuse amount of wealth. Uthman (r.a) contributed an overpriced well to the Muslim community. Abu Bakr (r.a) chipped in money to help people pay off their debt. Someone visited Abu Dharr al Gaghfari's house (r.a) and found it devoid of furniture. Upon inquiring why his house was so empty, Abu Dharr (r.a) said, "I have sent my things ahead for the house of the Hereafter" meaning, he lived a simple life so he could give more in charity and thereby increase himself in reward.


Can you imagine how many people we can help if we abolish interest? Allah says (see 2:275 above), the people who offer Salah and give in charity will never fear and never be grieved. Can you imagine what life will be like without stress and anxiety? Do whatever you can to come out of debt first and get together with relatives and friends, to give other people interest-free loans. Cut your credit cards and try to buy everything with cash or convenience card (card which only allows you to spend only the money you have in your account, there are no purchases on credit). Focus more on improving your life in the Hereafter; wealth, jewelry, friends and parties are transitory anyway. Build your imaan and increase your good deeds with charity.