[AveryKH]

Salaam all: I recently read in the Book that it's un-Islamic to accept interest on loans. I got a response on Facebook that said there is another system there. What is it like? How do you make money if you don't charge interest?

Also, on a related note, I loaned money to a friend and when she tried to pay me interest I told her that was a big no-no because it was against my religion. Is this right?

[jigglypottamus]

Just because there are banks in the middle east doesn't mean they don't charge interest - many of them do.

Many Islamic banks also have a specific type of contract where you agree that they will use your money for low-risk investment activities and you are paid a portion of the investment returns while they keep the rest. Essentially, its investment banking. Other banks have credit cards where once the transaction is made, they become the owner of the product or service and they put a markup on it which appears on your bill, and that's also how they make their money. They do this with commodities as well as large transactions like houses, cars, etc.