Interest paid by a bank on an account is riba: this has been the position of the reference bodies since the International Islamic Fiqh Academy's resolution of 1985. Having received it does not make the capital unlawful, but the interest itself must not be kept. The majority position is to get rid of it by giving it to people in need or to a cause of public benefit, without expecting any reward. In Switzerland, the amount to purify is the gross interest, before the 35% withholding tax, since that tax is refunded or credited. For the future, the solution is to prefer a non-interest-bearing account and to keep in cash only what is needed.
Most Muslims in Switzerland receive bank interest without having sought it: a savings account opened as a teenager, a pillar 3a account, a rent deposit locked in an account, interest credited by the tax authorities on advance payments. The amounts are often modest, especially since the Swiss National Bank brought its policy rate back to 0% in 2025. The question still comes up every year, when filling in the tax return.
This guide answers three questions: why this interest is riba, how to calculate and purify what has been received, and how to organise your accounts so you no longer receive any. It draws on the positions of the reference bodies and on the Swiss tax framework.
Is bank interest riba?
Yes, according to the consistent position of the reference bodies. A deposit in a bank account is legally a loan from the client to the bank, which can use the money and undertakes to repay it. The interest it pays is an excess fixed in advance on that loan: that is the very definition of riba.
The International Islamic Fiqh Academy affirmed this in its Resolution No. 10, adopted in Jeddah in December 1985: any excess on a debt in return for a delay is riba, and bank interest is part of it, whether high or low, and whether the loan serves consumption or production. Low rates therefore change nothing in the classification: 0.1% is still interest. Our guide to investing without riba explains the foundations of the prohibition.
This question should be distinguished from the purification of dividends. A dividend rewards holding a share in a company; only the small part coming from non-compliant activities needs to be set aside, which our purification calculator helps estimate. Bank interest, by contrast, must be purified in full.
Where does interest hide in a Swiss household's finances?
More often than you might think. The most common sources:
- The savings account, even if it pays very little. The most obvious source.
- The private or current account, sometimes paying a few hundredths of a percent.
- The bank pillar 3a account, whose return is interest. Pension solutions invested in securities avoid it, as we explain in our guide to halal pillar 3a.
- The rent deposit account, opened in the tenant's name and locked for the duration of the lease, which earns interest.
- Remuneratory interest, which some cantonal tax authorities credit on tax instalments paid in advance.
- The vested benefits account, holding occupational pension assets between two jobs, when it pays interest.
Retirement savings in the compulsory occupational pension scheme, credited with a minimum rate set by the Confederation, raise a separate question: they are neither chosen nor available, and scholars take different positions on how to treat them.
What should you do with interest money?
The majority position of contemporary scholars is to get rid of it: remove the amount received from your wealth and give it to people in need or to a cause of public benefit. This gift is not charity in the religious sense, and it does not count as zakat: you are not giving what belongs to you, you are separating yourself from it. It is made without expecting any reward.
Two points are the subject of differing views:
- Leaving the interest with the bank. Some advised this in the past; most scholars today recommend the opposite, withdrawing it and giving it away rather than letting the bank benefit.
- Using the interest to pay a charge. A minority accept applying it to bank fees or to the tax levied on that same interest. The most cautious position is to give away the full gross amount.
The capital itself remains lawful: the deposit was yours, only the excess is at issue. And there is no need to dwell on the past: you purify what has been received, then organise your accounts so you no longer receive any.
How do you calculate the amount to purify in Switzerland?
The reference document is the annual tax statement, or interest certificate, that the bank sends at the start of the year for the tax return. It shows, account by account, the gross interest credited and any withholding tax deducted. The same amount appears in the statement of securities in the tax return.
The withholding tax works as follows: the bank withholds 35% of the interest and pays it to the Confederation, but only if the interest credited on an account exceeds 200 francs per calendar year, under Article 5 of the Federal Withholding Tax Act. A taxpayer who declares their income correctly then recovers it, by refund or credit. It is therefore part of the interest received, and the amount to purify is the gross interest.
| Example | Account A · Account B |
|---|---|
| Average balance | A: 40'000 CHF. B: 80'000 CHF. |
| Rate paid | A and B: 0.4% a year. |
| Gross interest for the year | A: 160 CHF. B: 320 CHF. |
| Withholding tax deducted | A: none, the interest does not exceed 200 CHF. B: 112 CHF, i.e. 35%, recovered through the tax return. |
| Amount credited to the account | A: 160 CHF. B: 208 CHF. |
| Amount to purify | A: 160 CHF. B: 320 CHF, the gross interest. |
Where statements for earlier years are no longer available, scholars accept a reasonable estimate, based on the balances and rates of the time, rounded up.
The withholding tax is not a loss: it is returned to you. The amount to purify is therefore the gross interest, as shown on the bank's tax statement, not the net amount credited to the account.
Should you close your savings account?
There is no need to leave your bank. Most of the time, it is enough to move your savings to a non-interest-bearing account: a private account with no interest, or an account for which you ask for the interest to be removed. Most scholars recommend not knowingly opening an interest-bearing account with the intention of purifying the interest afterwards: purification repairs, it is not a method.
For the rent deposit, there are alternatives to a bank deposit, such as a guarantee from a rent deposit insurer; they carry an annual cost, but no interest to receive. For pillar 3a, the question is settled by choosing a solution in compliant securities rather than an interest-bearing 3a account.
What should you do with idle savings?
Once interest has been removed, money sitting in an account earns nothing, and inflation erodes its purchasing power. Our inflation impact calculator lets you measure that cost. The answer is not to go back to the savings account, but to separate two reserves:
- A safety reserve, of around three to six months of expenses, which stays available in a non-interest-bearing account. It absorbs the unexpected.
- Long-term savings, which can be invested in compliant assets: halal ETFs, screened shares or gold held in full ownership. Our guide to investing 10'000 CHF the halal way sets out the order of steps.
These invested savings then fall within the zakat base, using the method we explain in our guide to zakat on investments.
And the interest you pay?
The prohibition of riba covers interest paid as much as interest received: according to a hadith reported by Muslim, the Prophet ﷺ cursed the one who consumes riba, the one who pays it, the one who records it and its two witnesses. The question therefore also arises for consumer loans, credit cards with an unpaid balance, mortgages and leases. It calls for answers of its own, which we cover in our guides to halal leasing and buying gold on credit.
The most common mistakes
They stem mostly from accounting reflexes rather than questions of substance.
Purifying the net amount
The 35% withholding tax is refunded or credited: it is part of the interest. It is the gross amount on the tax statement that should be purified.
Counting purification as zakat
Giving away interest is not paying zakat, which is calculated on lawful wealth. The two operations remain separate.
Forgetting secondary accounts
Rent deposit, 3a account, a child's account, remuneratory interest from the tax office: this interest also appears on the statements and in the tax return.
Neglecting small amounts
A few francs of interest are still interest. The simplicity of the calculation is one more reason to do it every year.
Leaving savings idle for fear of riba
Avoiding interest does not mean giving up on growing your savings: compliant investments exist, and inflation has a cost too.
Bank interest is therefore one of the simplest compliance points to settle: you identify what has been received from the tax statement, purify the gross amount, then organise your accounts so the question no longer arises. The time spent checking your accounts once a year is the price of wealth that is entirely compliant.
Putting your savings to work without interest
Safety reserve, compliant investments, pensions: a halal investment expert looks with you at how to organise your accounts within the Swiss framework, and leaves you to decide with full knowledge of the facts.
Speak to an expertThis content is provided for educational purposes by ALG Club. It constitutes neither a fatwa, nor tax advice, nor a financial service within the meaning of the Financial Services Act (LSFin). As questions of compliance involve differences between schools of jurisprudence, it is for each person to refer to a qualified religious authority for their own situation. For withholding tax and your tax return, the tax authority of your canton is authoritative.