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Usury In Islam

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The notion of buy now and pay later has been the general consensus of American consumers for decades. Interest rates have been the main problem as American consumers have nearly accumulated nearly $11 trillion in debt. The introduction of the credit card has made it ever so easy for Americans to buy and buy as outstanding balances on credit cards have risen to more than $800 billion. With the savings rate nearing all-time lows, most consumers don’t have reserves, and so their vulnerable. For most of us, it’s tough to imagine life without credit cards as we reserve movie tickets, rental cars and hotel rooms, and we pay tuition, and buy our food all with credit cards. You name an expense and we’ll pay it by credit card if we can. Almost all Americans use credit cards even if it’s to defer payments on other bills.

The American dream of owning a home also cannot be possible without having an established credit line. Without having established credit there will be no way a potential home owner could qualify for a mortgage. The American dream of owning a house has also seen Americans taking on more than $8.8 trillion in mortgages, up an astounding 42 percent since the 2001 recession. The fast run-up in prices in recent years has made many homeowners feel wealthy, so they can ramp up day-to-day spending. Millions of Americans have taken advantage of low rates in recent years to refinance their mortgage, which has resulted in $715 billion (2005) borrowing against home equity.

It seems as if though in America and many other developed countries living a life without credit seems impossible to do. Without having credit for example in America, qualifying for a car loan or even a home loan would be nearly impossible. At times of economic hardship, when every good idea fails, when business can’t afford new investments because of the high cost of borrowing, when mortgage rates have gone up so much that it becomes difficult to maintain a decent living standard, many small savers still think that high interest rates mean at least that they get the most out of their savings. The truth is they pay more than they get. Also according to our trusted governments movements the only way to control a deficit is to raise taxes or to cut government spending. However, considering that the deficit continues to grow simply because of the amounts of compound interest added to the original debt, one of the most effective ways to reduce the deficit would be to reduce interest rates as Lower interest rates = lower deficit.

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The best approach would be to have no interest because the result of this would lead to no debt whatsoever. With no debt though how would governments, credit card agencies and mortgage companies make their money? America is solely run on interest as are most other developed countries. Is there anywhere that an individual could go in the world and have to deal with no interest at all? The answer to this question can be found within the religion of Islam.

Islam is an entire way of life, and God’s Guidance extends into all areas of the lives of Muslims. The religion of Islam has provided detailed economic regulations for the way a Muslim should live which is seen as being balanced and fair. It is the obligation of a Muslim to recognize that wealth, earnings, and material goods are the property of God, and we are merely His trustees. The principles of Islam aim at establishing a just society wherein everyone will behave responsibly and honestly. Muslims are not to deal in interest in any way as the Holy Quran says that “Those who devour usury will not stand….Allah has permitted trade and forbidden usury…. Allah will deprive usury of all blessing, but will give increase for deeds of charity….” (Qur’an 2:275-6) “O you who believe! Devour not usury, doubled and multiplied. But fear Allah, that you may really prosper.” (3:130). The Quran also goes on to mention that Allah (God) has declared war on those who consume interest. In Surah al-Baqarah, verses 278-27 of the Quran, He says: “O you who believe! Be afraid of Allah and give up what remains (due to you) from riba (usury) (from now onward), if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger . . .” The last Prophet of Islam as well told us that the ones who consume interest, the ones who give it to others, the ones who write it down, and the ones who witness is are all the same and they are cursed upon.

The meaning of interest or referred to as Al-RIBA in Arabic means to excess or increase. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earnings that is obtained that is free of exchange. Riba or interest therefore in Islam is considered as being a long with the condition that the borrower will return to the lender more than and better than the quantity borrowed. Even if it is one percent or 50 percent the religion of Islam forbids the taking of interest in all of its forms. A Muslim is not allowed to receive, pay or witness interest payments. However, the concept of interest has been twisted and abused to such an extent that many Muslim countries have allowed financial institutions to engage in interest-based activities.

When interest exists in almost every country in the world and even no in some Islamic countries then why does Islam denounce interest? The strict prohibition of Interest in Islam is a result of its deep concern for the economic, moral, and social welfare of mankind. The economic dependence on interest tends to discourage people from working or trading to earn money and the value of their work and trade gets diminished. The moral aspect of usury will ethically have a negative impact of people. The acceptance of usury discourages people from doing good to one another and lend out of good will. No one in todays modern day looks to loan money to a friend or family member just out of good character, everyone wants something in return and that is why Islam shows that interest only helps the rich become richer and the poor become poorer. A society which encourages interest on lending will require needy people to pay back more than he borrowed, which quite often is a source of huge burden. More money for some tends to generate envy and hatred among the poor toward the rich which leades to social disorders and the separation of classes.

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