Question Summary:
I know that receiving interest is not pemissible, however I need to know if one can offset interest received against interest paid on credit cards and bonds.

Question Detail:

I know that receiving interest is not pemissible, however I need to know if one can offset interest received against interest paid on credit cards and bonds.

Answer :

In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatuh
Severe warnings have been mentioned in the Holy Quran and the Ahadith of Nabi  (Sallallahu 'Alaihi Wasallam) regarding those involved in interest and usury.
Allah Ta’ala mentions in the Holy Quran:
 
الذين يأكلون الربا لا يقومون إلا كما يقوم الذي يتخبطه الشيطان من المس ذلك بأنهم قالوا إنما البيع مثل الربا وأحل الله البيع وحرم الربا.
Those who take ribā (usury or interest) will not stand but as stands the one whom the demon has driven crazy by his touch. That is because they have said: “Sale is but like ribā”, while Allah has permitted sale, and prohibited ribā. (Verse: 2:275)
 
يا أيها الذين آمنوا اتقوا الله وذروا ما بقي من الربا إن كنتم مؤمنين. فإن لم تفعلوا فأذنوا بحرب من الله ورسوله وإن تبتم فلكم رءوس أموالكم لا تظلمون ولا تظلمون.
O you who believe, fear Allah and give up what still remains of ribā, if you are believers. But if you do not (give it up), then listen to the declaration of war from Allah and His Messenger. However, If you repent, yours is your principal. Neither wrong, nor be wronged. (Verse: 2:278,279)
 
Nabi (Sallahu ‘Alaihi Wasallam) has not only forbidden Muslims from giving and taking interest, but also forbidden them from writing down the transaction of interest and witnessing it.
عن جابر قال لعن رسول الله صلى الله عليه وسلم آكل الربا وموكله وكاتبه وشاهديه وقال هم سواء. (رواه مسلم)
Hazrath Jabir (Radhiyallahu Anhu) narrates that Nabi (Sallahu ‘Alaihi Wasallam) cursed those who are involved in usury; whether it is the person who is giving usury, receiving it, writing the transaction or witnessing it.
(Sahih Muslim Vol.11 Pg.28 – Dar al-Ma’rifah)
It is understood from the abovementioned that it is not permissible to deal in any interest bearing transactions, irrespective of the fact that one receives the interest or not. The mere transaction in which there is an involvement of interest is prohibited. Disposing of interest in the correct way does not validate an interest bearing transaction. The Jurists have explained modes of disposing interest for those who erroneously get involved in interest; they have not stated that the interest bearing transaction becomes permissible by disposing the interest.
Therefore, it will not be permissible for one to open up an account in a bank that necessitates the receiving of interest. Surplus money should always be deposited in a current account, etc. where no interest is receivable.
There is a difference of opinion amongst the scholars regarding credit cards.
Some of the Scholars state that it will be permissible for a Muslim to have a credit card wherein the card holder has an account in the bank which has issued the card, and the bills of his purchases are directly debited to his account. In these types of cards, the bank charges interest only when the client defaults in payment of bills. The client can avoid the interest by making payments on time. However, it will not be permissible to have any other type of credit card besides the abovementioned.
The other group of Scholars state that it will not be permissible for a Muslim to have any type of credit cards, as having a credit card necessitates the client to be involved in an interest bearing transaction with the bank, wherein he agrees to pay interest in case of default. Making payments on time and not paying interest does not change the nature of the transaction.
Although there is a difference of opinion in regards to the usage of credit cards, neither of the scholars permit Muslims to have a credit card in which the payment of interest is certain; hence, it will not be permissible for Muslims, according to any of the Scholars, to have a credit card which necessitates the payment of interest.
Dealing in bonds will also not be permissible when it necessitates dealing in interest.
It is understood from the abovementioned that dealing in any kind of interest bearing transaction is impermissible. The issue of offsetting interest received with interest payable could only be raised if the interest bearing transactions were permissible.
However, if your question is in regards to interest received erroneously and interest which is payable due to an unavoidable circumstance, then the reason for receiving interest and paying interest has to be clarified before we could determine any ruling. Moreover, please clarify whether you wish to offset the interest received with interest payable in the same institute, or you wish to offset interest received in one institute with interest payable in another institute.
And Allah knows best
Wassalam
Ml. Abu Yahya,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In'aamiyyah