Why is Interest such a bad thing according to Islam?

In Islam, interest, or usury (riba), is condemned because it is viewed as an unjust economic practice that leads to exploitation and inequality. The Qur'an explicitly warns against it, stating, Allah hath blighted usury and made almsgiving fruitful 2:276. This indicates that while usury is detrimental, charitable giving is valued and rewarded by Allah.

The Qur'an further explains that those who engage in usury will be resurrected in a shameful state: Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch 2:275. Ibn Kathir elaborates on this, explaining that such individuals will be raised on the Day of Resurrection in a manner akin to those afflicted by insanity. This metaphor underscores the severe spiritual and social consequences of engaging in usury, which corrupts one's moral standing and leads to societal discord.

Additionally, the Qur'an makes a clear distinction between trade and usury, asserting that Allah permitteth trading and forbiddeth usury 2:275. This distinction highlights the ethical foundation of trade, which is based on mutual benefit and cooperation, as opposed to usury, which is predatory and takes advantage of the vulnerable.

In the teachings of the Prophet Muhammad ﷺ, the severity of engaging in usury is further emphasized. He warned against it by saying that it is one of the seven great destructive sins Sahih al-Bukhari 82:840. This categorization reflects the serious moral and social implications of usury, suggesting that it can lead to broader societal harm.

From a philosophical perspective, Al-Mizan explains that interest directly contradicts the principles of charity and benevolence in Islam. While charity promotes communal support and solidarity, interest fosters greed and deepens the divide between the wealthy and the poor. Interest is seen as taking without giving anything in return, which contrasts sharply with the spirit of mutual aid that is central to Islamic teachings.

Overall, the prohibition of interest in Islam is rooted in the desire to promote fairness, equity, and social harmony, safeguarding the community from economic harm and moral decay.