Is it permissible to invest in CD’s (Certificate of Deposits)?

Question:

Is it permissible to invest in CD’s (Certificate of Deposits)?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

A Certificate of Deposit is a savings certificate at various denominations issued primarily by commercial banks where the holder receives interest at a specified rate upon maturity.

Unlike savings accounts, a CD has a maturity date, after which you can withdraw your funds in full with an additional interest. If you choose to withdraw before that date, you’ll have to pay an early-withdrawal fee.

Investing in Certificates of Deposits is impermissible as it is an interest bearing investment.

And Allah Ta’āla Knows Best

Mawlana Faraz ibn Adam al-Mahmudi,
www.darulfiqh.com

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