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Ask the rabbi Family and Society Banking and Interest

Taking interest from a Jew

Rabbi Jonathan Blass14 Iyyar 5763
713
Question
If I had x money earning 3% interest and someone needed the money theoretically could I take the money out and lend it to him at the same 3% if it would save him paying 8% interest on a bank loan i.e. for his benefit... and also could I charge him more then I was earning and less then he is paying i.e. charge him 5%.. this time it’ll be in both our interests?
Answer
For a Jew to charge another Jew interest is forbidden even when it is in the financial interest of both parties. Even if you were to charge your friend less than the 3% interest you were earning- this too would still be forbidden. Speak to a rabbi about writing for you a "heter iska" loan contract that would enable you to give the loan as an investment. An investment differs from a loan in that you have a theoretical chance of losing the money invested but it is permitted to collect profit on your investment.
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