What is considered Riba (interest)in Islam?

In Islam, Riba is interest gained or paid on transactions or savings. This includes:

• Any interest earned from savings accounts, ISAs, and other savings investments.
• Interest earned by lending money, property, or goods
• Payments of interest for credit card fees, loans, or mortgages

In the case of donating Riba to charity, you would be required to donate the amount of interest earned e.g. the money accumulated as savings interest.

Islam forbids interest (Riba), both receiving and paying it. Many of us can end up accumulating interest through our bank accounts even if we don’t want it, so what should we do with Interest money?

Since it is not permissible to utilise interest for one’s benefits one should donate it to charity. Although there is no religious reward for doing so it at least disposes of the haram (illegal) funds in a shariah-compliant way.

Is Riba a major sin?

Riba (interest) is generally considered one of the major sins in Islam and explicitly discouraged in the Qur’an.