Praise be to Allaah.
It is not permissible to deal with riba (usury, interest)
either by putting money in the bank or taking out a loan, because of the
stern warning on the consequences of dealing with riba in this world and in
the Hereafter. Allah, may He be exalted, says (interpretation of the
“O you who believe! Fear Allaah and give up what remains
(due to you) from Ribaa (from now onward) if you are (really) believers.
279. And if you do not do it, then take a notice of war
from Allaah and His Messenger but if you repent, you shall have your capital
sums. Deal not unjustly (by asking more than your capital sums), and you
shall not be dealt with unjustly (by receiving less than your capital sums)”
And Muslim (1598) narrated that Jaabir (may Allah be pleased
with him) said: The Messenger of Allaah (peace and blessings of Allaah be
upon him) cursed the one who consumes riba and the one who pays it, the one
who writes it down and the two who witness it, and he said: they are all the
The one who has fallen into that has to repent to Allah, may
He be exalted, and take his money out of the riba-based bank, unless he has
no choice in order to protect his money because there is no Islamic bank in
his country. In that case, he should limit it to using a current account
only; it is not permissible for him to use interest-bearing accounts on the
basis that he will get rid of the interest, because the main aim is to give
up the major sin of riba.
It is not permissible for the one who is dealing with riba to
benefit from the interest; rather he should get rid of it and spend it on
charitable causes, such as giving it to the poor and needy. It is
permissible for him to give it to his relatives on whom he is not obliged to
spend, and they may make use of it in whatever way they want, such as buying
food or clothing or anything else. It it does not have to spent specifically
on paraffin or paving stones; rather it may be spent on any permissible
thing, because if a poor person takes it, it is permissible for him and it
becomes part of his wealth; the prohibition only applies to the one who
deals with riba.
See also the answers to questions no.
And Allah knows best.