Why charging interest is a no-no

Did you know that even banks need to be “Kosher?”
Before you rush to your wallet to check if there is a Kosher symbol on your debit card… (you are not going to find one!) let me explain.
 When the Torah discussed in our Parsha the Mitzvah to support those in need, it mentioned the idea of providing loans. But it cautioned us:
 “You shall not take from him interest or increase, and you shall fear your G-d, and let your brother live with you!
 “You shall not give him your money with interest, nor shall you give your food with increase!”
 So lending money with interest to fellow Jews is a no-no.
 So much so that the Midrash has some very harsh words for those who do not keep this Mitzvah. “If someone doesn’t accept this Mitzvah, it’s as if he doesn’t accept G-d!”
Now, think about all the banks and financial institutions in Israel owned by Jews and providing loans to fellow Jews. If they cannot charge interest, they wouldn’t be in business.
This is where “Kosher” comes into play. It obviously has nothing to do with food, but it provides a kosher way to offer loans. “Heter Iska” is a somewhat complicated contract that structures part of the loan as an investment. (If you want to read more of the technical details of this contract, you can click here)
Okay, so all the Israeli banks can breathe a sigh of relief and stay in business. (Yes, they all operate under a Heter Iska agreement). Still, we are left with the question: what’s wrong with charging interest? Why the harsh words of the Midrash? Why is this Mitzvah so crucial that without it, it’s as if we don’t accept G-d?
Here is a beautiful insight from the Rebbe on this matter.
Providing a loan with interest is one of the easiest ways to make money. In fact, when a borrower is an honest person who will make the payments on time, it’s an effortless way to earn money. We don’t need to do anything: we gave the money once, and now it keeps making a profit.
And that is a problem. A big problem.
Because G-d structured the world that everything – everything! – must be earned through efforts.
There’s no free lunch, and if it is, it’s because they are trying to sell you a timeshare…
G-d wanted us to always remember that, so he prohibits us from charging interest. Recognizing that any success comes through hard work is a fundamental pillar of Judaism.
Yes, G-d could have changed the rules and allowed free lunches. But He knows us. He knows how it feels. It doesn’t feel that great to be needy that receive everything for free. And it feels fantastic to know that what we have is the fruit of our labor.
In the hi-tech world they like to say, “if you don’t pay for the product, you are the product.”
G-d didn’t want us to be products. He wants us to be partners.
About the Author
Rabbi Mendy Kaminker is the Chabad Rabbi of Hackensack, and an editorial member of
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