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Fatwa CenterInterest rates charged by banks
Question
Why is the interest charged by banks Haram if we consider that the yearly inflation rate in USA is almost 3%, and the checking account interest is 2% that means the money is losing value and there is no real gain (Riba)? So why is this interest Haram? Please use your judgment and don't just say it is Haram.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
The Islamic Fiqh Committee, in its conference held in Kuwait in December 1988, determined the following:
The crucial factor in paying back constant debts in any currency is by paying the same amount borrowed and not by paying back the value because debts are paid back by exactly the same amount borrowed and it is not permissible to link constant debts, whatever its source may be, with the market rate. Based on this decision, we have to know that inflation does not change the terms of the loan and the money deposited in the bank. Therefore, the depositor must only get his capital back and whatever surplus money is there is forbidden. Allah Says (what means): {…but if you repent, you shall have your capital sums….} [Quran 2:279]"
Therefore, you should know that what the bank calls a deposit is indeed a loan with usury and interest, because it is money saved for the depositor, and the bank has to pay back the exact amount of money in addition to some extra money. This is exactly the reality of a loan with interest and usury.
The money deposited (saved) in the bank is not so in Islamic terms.
Allaah Knows best.
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