Investment in bond and money market : question regarding use of savings bonds

Fatawa Question

As-Salaam Alaikum and thank you in advance for taking the time to read my email ; I realize that you read many such queries in the course of your work. I am a recent medical school graduate who has approximately $ 52,000 in outstanding loans that I am currently repaying monthly. My father purchased U.S. Savings Bonds when I was a child in an effort to have funds to pay for later education (may Allah SWT forgive him; he apparently did not consider the prohibited aspect of interest in bond growth). My question is this : although I realize that using funds gained from interest is prohibited ; would it in this case be permissible to use the funds gained from maturation of the bonds to pay off the debt ? My reasoning is that it is the lesser of two evils: while use of interest-accrued funds is not desirable, it is preferable in this situation since by using it to pay off the debt it would decrease the amount of interest paid on the loan in the long term. The way I view this potential strategy is that I would use, for example, $ 20,000 to make a sizeable deduciton to my debt; and then pay off the percentage of the $ 20,000 that was from interest-profit (since the original price of the bond was $ 12,000 or so, I would pay $ 8,000 to a charity). Do you think this is an Islamically acceptable alternative to paying off the debt long term and in the process paying a large amount of interest ? Thank you again for your time,

Fatwa

Click hereto view more

Publication Date

2006-08-06

Main Subjects

Economics & Business Administration
Islamic Studies

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-790525

• APA
• MLA
• AMA