What is riba in Islam?

What the word means

"Riba" is Arabic for increase or growth. In Islamic law it refers to a gain that comes from lending money, or swapping certain goods, without any real work, risk or exchange of value behind it. If you lend 1,000 and demand 1,100 back simply because time passed, the extra 100 is riba. It doesn't matter whether the rate is high or low, or whether you call it a fee: a guaranteed extra on a loan is the problem.

The two types of riba

• Riba al-nasi'ah (riba of delay): an increase charged for time on a loan or debt. This is the kind found in mortgages, car loans, credit cards, payday loans and savings accounts. It's the type most people mean when they talk about riba.
• Riba al-fadl (riba of excess): an unequal swap of the same kind of goods. The Prophet ﷺ named gold, silver, wheat, barley, dates and salt, and said they must be exchanged "like for like and equal for equal", hand to hand (Sahih Muslim 1587). Scholars apply this to similar items today, such as exchanging currencies.

Why Islam forbids it

Islam wants money to earn money only by sharing real risk and effort, as in trade, partnership or rent. With interest, the lender is guaranteed a profit while the borrower carries all the risk, which can trap people in growing debt. The Quran tells those who repent from riba that they may keep their original capital, so "you do no wrong, nor are you wronged" (Quran 2:279). The Prophet ﷺ cursed the one who takes interest, the one who pays it, the one who writes it down and the two witnesses, and said "they are all equal" (Sahih Muslim 1598). He also counted it among the seven destructive sins (Sahih al-Bukhari 2766).

Everyday examples

Riba shows up in ordinary Western life: interest on a student loan, a credit card balance, a car finance deal, a regular mortgage, or the interest your savings account pays you. Islamic finance offers alternatives built on sale, lease or partnership. For home buying, see Can I have a mortgage as a Muslim? For jobs that deal with interest directly, see Can I work at a bank as a Muslim?

Scholars differ on some details, such as how far riba al-fadl extends and how strict to be when a Muslim minority has no realistic alternative. A few councils allow limited exceptions in real need, while most scholars hold to the general ban. If interest has already landed in your account, there's a simple way to deal with it. See What do I do with interest money from my bank account?