To Overdraw and Pay Interest

Q: In case one overdraws his / her account, the bank charges some interest. Is it allowed to overdraw and in which cases?

A: If one overdraws in accordance with one of the Islamic contracts, it is no problem. But, if it is done with the intention of taking loan from the bank planning to pay interest, it is a riba-bearing loan and haram.

Q: In England students receive a student loan. They are not required to repay it unless the student is graduated and his / her yearly salary exceeds a certain level. However, the debt increases every month according to the inflation rate in U.K. Is it permissible to get such a loan considering that it involves interest in the above mentioned manner?

A: It is haram to take this loan in which it is made a condition to pay interest. Anyhow, the loan taker is its owner and is allowed to use it.