Common Everyday Cases of Interest

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"Keep the Change"

  1. It is forbidden to lend money in order to get less than a prutah more than he lent.[1] After the fact if one collected interest worth less than a pruta some hold that it doesn't need to be returned.[2]
  2. There is no time limit to be considered a loan, even a loan for a moment is a loan and is subject to interest. This is true even if the time lapse isn't for the time-value of money but purely because of a convenience.[3]
  3. It is questionable if it is permitted to borrow something and return back a tiny bit extra. For example, if you split a cab and one person pays the whole fare and the other person owes him $4.96, it seems problematic to pay the full $5 and say keep the change. The reason is that giving the extra four cents is interest which you're paying at the time of the loan.[4] Many poskim permit it when it is an amount that is insignificant to both of them (that if it fell on the ground they wouldn't pick it up) and some specifically permit it when you say give the change to tzedaka.[5]

Checks

  1. Some poskim allow selling a check that is able to be cashed immediately for less than its face value.[6]

Small Amounts

  1. It is forbidden to gift interest even in small quantities.[7]

Talmidei Chachamim

  1. A Talmid Chacham who borrowed from another Talmid Chacham food he can return him some more than he got up to a fifth since they are so careful about the halacha it is obvious that they are giving purely as a gift and not because of the loan.[8]
  2. Some say that it is permitted for a Talmid Chacham to stipulate with another Talmid Chacham to pay him a little bit of interest since it is understood to be a pure gift and because of the loan. This leniency should be relied upon sparingly so that people don’t mistakenly extrapolate.[9]
  3. Who is a Talmid Chacham? Some say that he needs to be knowledgeable in most areas of the Talmud and can answer questions properly and extrapolate halachot from one area to another and is very scrupulous of the halacha. Some say that it is referring to a student of Torah who knows the laws.[10]
  4. It is unclear if the wife of a talmid chacham is afforded the status of a talmid chacham for this halacha.[11]


Exchanging Favors

  1. It is forbidden to ask your friend to work for you today and you’ll work for them at a later date if the second job is harder[12] or the value of the second work is more than the first one.[13]
  2. For example, it is forbidden to ask your friend to give you a ride somewhere and next week you’ll give them a ride somewhere else that is further or would take more time.[14]
  3. It is forbidden for someone to watch someone else’s children in exchange that they will watch your children at another time if watching your children is harder or it is for a longer period of time. [15]
  4. It is permitted to exchange jobs even if the second is harder if the jobs being done are for a partnership and the people in question are partners.[16]
  5. If one person asks his friend to build his sukkah with him in exchange for him helping his friend build his sukkah if the second one is harder it is forbidden.[17]
  6. It is forbidden for a teacher to arrange for someone to substitute for him in exchange for him doing the same for that person if the second job is more difficult or is worth more.[18]
  7. It is a dispute if isn’t clear if the second job will be harder or worth more than the first job if it is permitted to initiate such a deal. One should be strict.[19]

Exchanging Loans

  1. It is forbidden to trade loans because doing so is taking and paying the value of a loan.[20]
  2. If after someone lent you money, it is permitted to lend them back.[21]
  3. It is forbidden for a loan gamach to stipulate that only members who lent money to the gamach may borrow from it because doing so is like lending somemone in order to get back a loan. A rabbi should be consulted how to set up such a gamach.[22]

Leniencies

  1. If there is no reason that one job should be done before the other one it is permitted since the exchange is a simple trade of favors and there is no intention to charge for the passage of time.[23]
  2. If the people making the arrangements aren’t careful to be exacting then it is permitted since it is just one doing a chesed for the other. For example, if neighbors watch each other’s children from time to time and they don’t meticulously calculate how many times they watch each other’s children it is permitted.[24]
  3. If the two people arranged to do each other’s jobs simultaneously there is no prohibition of ribbit at all.[25]
  4. Some hold it is permitted if you don’t stipulate from the beginning that they would exchange favors as long as the difference between the difficulty or price of the favors isn't great.[26]

Family Members

  1. It is forbidden to charge interest even between a parent and child even if they aren’t Bar/Bat mitzvah even though it is understood to be a gift.[27] This applies both to a parent borrowing from a child and a child from a parent.[28]

Buying an Item for Someone Else

  1. If someone asks his friend to go to a place where it is cheaper to buy that item and he gives him the money in advance, it is only permissible if the giver has responsibility for the money until the sale or that the friend has no responsibility for the item on the way back. For example, if an Israeli asks his friend to buy something for him for cheaper in America and pays him in advance they need to arrange that the friend not be responsible for the money until the sale or not be responsible for the item after the purchase.[29]
  2. The halacha considers that when you buy an item for someone else the item immediately belongs to that person for whom you bought it. One can explicitly stipulate otherwise.[30] If one did not stipulate and the friend bought an item for his friend with his own money then the friend may not pay extra for the item. Doing so would be interest since when the item was purchased a loan was established from the friend to the sender. Paying extra is interest. To avoid any issue they have to stipulate that the friend is buying it for himself and then selling it to the sender later.[31]

Early Bird Specials

  1. Municipal kindergartens sometimes have a two tiered pricing system. If you pay for each month you pay one price and if you pay in advance of the entire year or several months there is a discount. It is permitted to pay with either arrangement.[32] Some apply the same to private school tuition with a two tiered system.[33]
  2. Catering for a wedding, bar mitzvah, or otherwise should not fix a price in advance without a heter iska because doing so can involve there being a discount for this early payment. It is certainly forbidden without a heter iska if there is a discount for advanced payment.[34]
  3. In renting a catering hall or wedding hall only it is permitted to pay a discounted price for early payment since it is a rental of real estate.[35]

Borrowing Someone's Credit Card

Borrowing cc.jpg
  1. It is permitted for someone to borrow another Jew's credit card to pay for a purchase and repay them the amount spent. Even if the purchaser receives points from the credit card company, that isn't considered interest since it doesn't come from the borrower. Additionally, the borrower may not the purchaser for any interest fees that the purchaser may incur if he pays late.[36] If the borrowing is done in a way that it is assumed that if the borrower won't pay on time he will have to pay the interest fees, such as is common with large amounts, it would be forbidden to lend your credit card.[37]
  2. It is problematic to borrow someone else's credit card if there are two prices for a certain product, a cheaper price for cash and more expensive for credit. Since there are two prices we can view the cash price as the real price and the credit card price as the convenience price. Once the borrower of the credit card uses the card to buy a product that is worth less than the credit card price and repays the credit card price he is giving interest to the credit card holder.[38]

Taking a Loan from an Israeli Bank

  1. It is permitted to take a loan from an Israeli bank account since there is a heter iska klali. It is preferable to write on the contract that it works with a heter iska.[39]

Car Loan

  1. Getting a loan for purchasing a car may not be taken with interest if the loan, provided by the bank or dealership, is done with another Jew. TO avoid any issue, one can either take the auto loan from a non-Jewish bank[40] or with the Jewish lending group, appending to the loan document that it is done in accordance with the heter iska of a standard Israeli bank.[41]
  2. It is permitted to buy a car on discount by paying upfront even though it won't be available or delivered until later as long as the seller owned it at the time of the sale and the seller didn't explicitly state that the reason for the discount is because it is paid in advance.[42]

Sources

  1. Tosfot Bava Metsia 61a s.v. im writes that based on a klal uprat it is possible to deduce that less than a prutah is excluded from ribbit. Rosh agrees. However, The Tur 161:1 cites the Ramah who disagrees. See Ritva 61a fnt. 35 who points out that the Ramah cited by Shitah Mikubeset 61a seems not be discussing this idea. Shulchan Aruch 161:1 follows the Ramah. See fnt. to Ritva who cites the Gedulei Trumah 46:1:1 who explained that the only dispute is whether a person can lend less than a prutah to receive interest but the Mishneh Lmelech Hilchot Malveh Vloveh 6:1 disagrees and says that it is a dispute where the loan is greater than a prutah to gain interest that is less than a prutah. Rav Elyashiv on Bava Metsia 61a s.v. sham btosfot comments that the Gra explains the Ramah who says that it is forbidden to take less than a prutah because a half shiur of something prohibited is also prohibited. Rav Elyashiv questions this because perhaps taking less than a prutah in one loan can’t possibly combine with another less than a prutah unless it would be another loan.
  2. Shach 161:3 cites the Levush who suggests that the reason we don't collect less than a shava pruta is because Bet Din wouldn't a judge case of less than a shava pruta. However, Shach 103:3 argues. Chelkat Binyamin 161:4 cites the Prisha who said that the mitzvah to return it doesn't apply if it is less than a shava pruta. These two approaches differ with respect to whether there is a heavenly obligation to return less than a shava pruta, according to the Prisha there isn't.
  3. Laws of Ribbit p. 116, Brit Yehuda 2:3. The Brit Yehuda writes that it is forbidden even though there's no need for a time lapse but the loan is purely for a convenience of the borrower. For example, he cites the Talmid Rashba (cited by Bet Yosef 173) and Ritva 46a regarding someone who asks for a loan while in the marketplace to purchase an item and then offers to repay the loan with interest when they walk together to his home. The Talmid Rashba concludes that paying that interest isn't ribbit since it isn't for the time lapse but for the convenience. Brit Yehuda isn't certain whether the Talmid Rashba meant to permit even charging for the convenience of the borrower or just the convenience of the lender. Either way, the Brit Yehuda argues that the rishonim and poskim absolutely do not accept this view. Additionally, you could only pay for the exact amount of the fair wage of the inconvenience otherwise caused to the lender.
  4. Shulchan Aruch 160:4 holds that it is forbidden to give a gift at the time of the return of the loan even if one doesn't specify that it is for the loan. Shach 160:4, Taz 160:2, and Chavot Daat 160:2 agree.
  5. Minchat Yitzchak 9:88, Chelkat Binyamin 160:33, Horah Brurah 160:15, Laws of Ribbit p. 43, Rabbi Hoberman ("Keep the Change")
  6. Malveh Hashem 2:15:25 is lenient because one is selling it for less because of the inconvenience of having to cash it and also it is done as a sale and not as a loan. See Laws of Interest p. 217 who is lenient to sell a check at a discount.
  7. Rama 160:17 only permits giving interest in small amounts for Talmidei Chachamim on occasion but not everyone.
  8. Gemara Bava Metsia 75a, Shulchan Aruch 160:17
  9. Rama 161:17
  10. Biurim of Chelkat Binyamin
  11. Biurim of Chelkat Binyamin
  12. Shulchan Aruch 160:9, Chelkat Binyamin 160:80, Mishnat Ribbit 19:2, Brit Yehuda 11:1
  13. Chelkat Binyamin 19:80, Brit Yehuda 11:1
  14. Mishnat Ribbit 19:3
  15. Mishnat Ribbit 19:3
  16. Chatom Sofer YD 135, Brit Yehuda ch. 11 fnt. 1, Chelkat Binyamin 160:79, Mishnat Ribbit 19:6. The Chelkat Binyamin explains that the reason is that the first person isn’t working for the second person but rather they are working for the collective business.
  17. Mishnat Ribbit Biurim 19 fnt. 1
  18. Mishna Ribbit 19:3
  19. Rashi 75a and Tur 160:9 imply that even if it isn’t clear that the second job is harder it is still forbidden the transaction. Prisha 160:15 states this explicitly. However, Shulchan Aruch 160:9 implies it is permitted. Chelkat Binyamin 160:82 is strict.
  20. Rama 160:9 quotes the dispute of the rishonim if it is permitted to lend someone on condition that they lend you back afterwards. The Gra holds it is forbidden.
  21. The Chelkat Binyamin 160:90 cites the Graz who says that for rabbinic ribbit cases we can follow the rishonim who permitted trading one loan for another loan. Therefore, if after the setup of the loan it is permitted to lend them in return since that would only be rabbinic ribbit even if one gave cash in return after the setup of the loan.
  22. Mishnat Ribbit 4:12. See Maharsham Shik 157, Maharam Brisk 2:18, Dvar Avraham 3:22, Minchat Shlomo 2:68:14, Brit Yehuda 11 fnt. 13, Netivot Shalom 160:18.
  23. Mishnat Ribbit 19 fnt. 1 s.v. umstimat writes that if the people arranging the agreement don’t care which job is first then it is clear that they aren’t charging one another interest for the passage of time for the vale of the first job. He cites this from the Kuntres Acharon Lkitzur Piskei Dinei Ribbit 8:4. He ends that Rav Shternbuch advised avoiding this by stating that one shouldn’t arrange it as an obligation.
  24. Chelkat Binyamin 160:79, Mishnat Ribbit 19:3
  25. Chelkat Binyamin 160:81. This is also clearly implied by Rashi 75a s.v. aval, Tur and Shulchan Aruch 160:9.
  26. Brit Yehuda 11:2 citing Gedulei Truma 3:24, Mishnat Ribbit 19:5
  27. The Gemara Bava Metsia 75a concludes that it is forbidden to charge your children interest because it is teaching them a bad lesson. That is also the opinion of Rambam Malveh Vloveh 4:8 and Shulchan Aruch 160:8. Why in fact isn’t it biblically forbidden to charge your children interest irrelevant of the fact that it is teaching a bad lesson? Chelkat Binyamin cites three approaches as to why it is technically permitted. 1) It is certain that in the end you don’t collect it (Prisha 160:13). 2) We’re only about money that the father gave the child and is now taking it back as interest (Ritva 75a, Knesset Hagedola, Lechem Mishna 4:8). 3) It is understood that the person means to give a gift to his children as a pure gift that he would have done so even if they didn’t lend money (Taz 160:4).
  28. Taz 160:4 based on Rambam
  29. Torat Ribbit 9:41. He explains that by giving the money in advance and having the buyer return him the item for that price back in the more expensive place is interest. He is giving him money and getting in return an item that is worth more than the money spent in the place where the buyer lives. If the buyer takes responsibility for the money until the sale, it isn't a loan at all but rather an agency of the friend. Alternatively, if the buyer takes responsibility for the item on the way back it is a loan but the friend isn't doing him a favor in returning the item and taking responsibility for it.
  30. Shulchan Aruch C.M. 183:4 based on Bava Kama 102b
  31. Torat Ribbit ch. 9 fnt. 89
  32. Torat Ribbit 10:74 explains that it is permitted to pay a cheaper price in advance for a rental or salaried worker for a service if it was done in advance (see Shulchan Aruch Y.D. 176:8). The payment is really hiring the city to provide a service. Even though generally one can't hire a worker for cheaper in advance unless the worker starts immediately (Shulchan Aruch Y.D. 176:8) since the arrangement isn't a timed worker (poel) but a serviced worker (kablan) that they can't retract from it is permitted. He quotes that Rav Elyashiv permitted this.
  33. Rav Zeev Cohen in Kuntres Poalim BShabbat by Chicago Kollel p. 10 wrote that the leniency of paying an early discount for wages found in Shulchan Aruch 176:8 can be applied to paying school tuition in advance for a cheaper price since the school is working for the parents and it is like they began the job immediately since they need to prepare the school, the curriculum, and materials far in advance of the actual school year.
  34. Torat Ribbit 10:76
  35. Torat Ribbit 10:79
  36. Rabbi Doniel Neustadt on torah.org, chabad.org, and dinonline.org.
  37. Chelkat Binyamin 170:17 describes the issue of borrowing credit cards at length. When someone borrows a credit card and uses it, he is considered as though he borrowed from the credit card company and the credit card holder is a guarantor to pay the debt to the company. Indeed it can be even more serious if it is viewed as though the credit card holder borrowed from the credit card company since he is indebted to them and separately he lent that money to his friend who is using his credit card. Either way if the agreement was that the borrower of the credit card would pay the credit card holder interest if he didn't pay on time that is a forbidden arrangement even if they pay on time and never engage in interest. However, if they arranged that the borrower wouldn't have to pay the interest even in the event that he didn't pay on time then it is permitted. For small purchases it can be assumed that the arrangement was that the borrower would only pay for the capital and not interest if he didn't pay on time.
    • The reason that the points are permitted is because they are considered a gift from a third party and not the Jewish lender to the Jewish borrower (see Shulchan Aruch 160:13 and Shach 160:20).
  38. Chelkat Binymain Biurim 170:1 s.v. ela p. 392
  39. Yalkut Yosef Sova Semachot v. 1 p. 517 writes that it is permitted to take an interest loan from the Israeli banks. Here are his reasons:
    • The Israeli banks were set up with a heter iska klali. Even so it is preferable to say that it is done according to the heter iska. Tzemech Tzedek YD 88 writes that you should write the contract uses a heter iska and not just say it otherwise it is a haarama. Simchat Cohen 7:96 and Yalkut Yosef describe how Rav Shmuel Salant set up the Israeli banks with a heter iska. To rely on the heter iska the person taking the loan should have to use it for business and not for debt or needs. Graz Ribbit n. 42 writes that a loan with a heter iska that is spent for something other than a business is prohibited. Har Hakarmel 25 agrees. Shoel Umeishiv 3:160 allows using the loan for something else since as a result of the loan one is able to make money with another business. Maharsham 2:216 agreed. Imrei Yosher 1:108 argued with the Shoel Umeishiv based on Teshuvot Maimon in Bet Yosef 177. Teshurat Shay 88 agrees. Maharshag YD 1:5 argued that a heter iska klali is ineffective unless you state it specifically.
    • the corporation of the bank has a limited liability for individual owners and as such there's no loan between two people but between a corporation and an individual. Rashba responsa 1:669 entertained the idea that there's no ribbit with money designated for charity that doesn't belong to any individual. Maharit 45, Har Tzvi YD 126, Tzafnat Pane'ach 184, Bet Avi 3:129:6, Maharia Halevi 2:54, and Cheshev Haefod 53 are lenient. are also lenient. See Minchat Shlomo 1:28, Minchat Yitzchak 3:1:2-3, Chelkat Yakov 3:160, and Chayei Halevi 2:54. Igrot Moshe 2:62 writes that there's no ribbit for a corporation to pay interest like in a savings bank but there is when discussing an individual paying a corporation.
    • According to Rashi (cited by Rama 160:16) that there’s no prohibition of ribbit when done through a shaliach perhaps that can permit using a bank loan since the teller is merely an agent of the bank.
  40. dinonline.org (3/8/2020)
  41. toraland.org.il
  42. Milveh Hashem 1:9:23 based on Shulchan Aruch Y.D. 173:7.