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I have a (non-interest bearing) account with a local bank. Typically this account charges a monthly service fee, which is waived as long as a minimum balance is maintained.

If I were to agree to provide a loan to someone, but the only cash I had available would dip into this minimum balance, is it permissible to ask the debtor to repay the loan as well as the incurred service charges?

As an example, I lay out the following scenario:

  • I have a bank account which typically charges me $5 a month unless I maintain a minimum balance of $1000, at which point the bank charges me nothing.
  • I regularly maintain exactly this minimum balance.
  • I agree to loan someone $100.
  • This leaves $900 in my account, which is below the minimum balance. As such, the bank charges me $5 in monthly fees.
  • I am re-paid the $100 after a period of four months.

As a condition of the loan, is it permissible for me to also demand repayment of these service charges (i.e. $5 * 4 = $20) which were incurred as a direct result, or would that be considered riba?

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1 Answer

In the name of Allah, Most Beneficent, Most Merciful

Riba (interest) is a factor that directly benefits the lender. The extra amount you are collecting is the service charge which in turn is demanded by your bank. This amount is neither demanded by you directly, nor does it benefit you directly.

Since most likely this is not riba, two things should be obvious:

  1. To avoid misunderstanding you must discuss these terms while giving out the loan. (Though not doing it will not make your transaction interest-based)

  2. If ever in the loan period you added the money to your account and changed the balance to more than $1000, service charge of this period should not be collected. You should charge only what you are charged. Any extra amount you get will likely be deemed riba.

Having said so much, I still leave you with a task: get a scholarly opinion. Before making any decision, please consult a scholar and if my answer turns out to be contradictory to it, post an answer here and alert me.

Jazaakallah.


ۚ وَاللَّهُ عَلِيمٌ حَكِيمٌ (And Allah is the All-Knower, the Wise)

اللَّهُمَّ انْفَعْنِي بِمَا عَلَّمْـتَنِي وَ عَلِّمْنِي مَا يَنْفَعُنِي

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