If Islam prohibits the giving and taking of interest, where do Muslims do their banking?

Question

In America: how do they buy a house or a business; none use credit cards?

Answer 1

Islamic banks adhere to the concepts of Islamic law. Islamic banking revolves around several well established concepts which are based on Islamic canons. Since the concept of interest is forbidden in Islam, all banking activities must avoid interest. Instead of interest, the bank earns profit (mark-up) and fees on financing facilities that it extends to the customers. Also, deposit makers earn a share of the bank’s profit as opposed to a predetermined interest.

There are three companies offering Islamic Home Financing to the community in the
United States. These are:
1. Al-Manzil Islamic Financial Services (“Al-Manzil”), a business unit of the
United Bank of Kuwait PLC. - New York, New York.
2. American Finance House LARIBA – (“AFHL”) – Pasadena, California
3. MSI Financial Services Corporation (“MSI”) – Houston, Texas.


Here are a few articles from the United States banking world.

http://www.islamicbankingnetwork.com/

http://www.nubank.com/islamic/index.html

http://www.lariba.com/knowledge-center/articles/pdf/LARIBA-2000%20Islamic%20Home%20Financing%20in%20the%20United%20States.pdf

http://users.bart.nl/~abdul/chap4.html



http://www.newyorkfed.org/newsevents/speeches/2005/rut050422.html

Answer 2

Surprisingly enough there are interest free checking and savings accounts. Also there are Islamic mortgage companies. From my understanding this is how the mortgage works. You put down a down payment on the house, lets say 10,000 and the house cost 100,000. That would mean you have paid for 10% of the house and the mortgage company owns the other 90%. So as you pay your loan you will also pay rent on the part you don't own. There are other types of interest that you can't get out of. You just do your best not to take part in it, if you have not choice then it falls under a necessity and when something is a necessity then the rules forbidding it or over looked until another option is available. Just like if your starving and the only thing to eat was pork then you can eat it, but as soon as other food is available you stop eating the pork. I hope I have made sense.

Answer 3

No we use credit cards. Im not sure if this was allowed by our religion but my rents bought a house. They didnt have bought money to pay it all at once so they loaned like 300,000 from the bank. Like after a month they gave it back because they got the money. We could barrow from a family member. But yeah interest in banks isnt allowed. But there coming out with ways where under privileged families could load money without actually going against the religion.

Answer 4

Hi. Im from Malaysia so here we use Islamic banking. its very popular here and many of my non-muslims friends bank there too.

Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Shariah) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba in Islamic discourse. Generally, Islamic law also prohibits trading in financial risk (which is seen as a form of gambling). In addition, Islamic law prohibits investing in businesses that are considered haram (such as businesses that sell alcohol or pork, or businesses that produce un-Islamic media). In the late 20th century, a number of Islamic banks were created, to cater to this particular banking market.

For info in America, click here:

http://www.americanfinance.com/

Answer 5

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Answer 6

There are banks that will offer a set profit when they finance a house or a loan instead of "interest" on loans and mortgages. These things dont cost much more than the interest rate but it solves the problem.

Answer 7

The really religious ones avoid all of what you said like the plaque the others think on the realm of reality. You have to do what you have to do in order to live. That's how my husband did it when we were living there. Many find a way to make up for it, by paying that amount for example to the poor due at the end of each year or whenever it is due; something to that effect.

Answer 8

I have heard of Muslim banks. They do the deal a little differently so that it isn't interest. I think the bank actually owns the house until it is paid for.

Answer 9

Why would a bank loan money if they were not going to get any interest? So that stops businesses and ruins the economy.
They are not known for being intelligent about keeping the economy going. Then the article said, "they go broke are poor and no new businesses are started so they riot in the streets."
it becomes a catch 22 of bad business decisions.
Their religion keeps getting in the way of making decisions that might help their people. So they resort to fighting over who gets the oil revenues and then other consumers get scared and find alternative sources of fuel and they cut their own throat.
Or they may blow up an oil well because they don't get the revenue and if I can't have it no one can. Philosphey!
So the economy isn't in great shape.
actually those above are wrong! When the radicals took over the previous banking stopped and caused lots of problems.

Answer 10

In Australia the Arab Bank charges interest.