Assalamualikum,
I would like to know Premium Bonds - NS&I is Halal or Haram? If it’s Haram could you please explain the reason.
Jazakalluhiran
Wa alaykum salaam,
In the UK, a premium bond is defined as a nonmarketable government security issued by National Savings & Investments at £1 each. Periodic interest is not paid; instead the investment is entered into a draw every month to win prizes from £25 to £1 million. The bonds are repayable upon demand.
In simpler terms, a premium bond is a type of bond that you can buy as part of a UK government system in which you have the chance to win money each month for as long as you do not sell the bond.
When analysing this transaction Islamically, the premium bond holder is advancing a loan to the bond issuers. The bond holder/lender is entitled to a surplus once the stipulated condition in the contract matures.
As a principle, a loan with a conditional increase above the principal amount is interest. Therefore, it is impermissible to invest in premium bonds.
Jazakaluhiran Mufti Faraz Adam for your explanation, I have set it up a direct debit every month. Inshaa Allah I will cancel my account.
Alhamdulillah, that is the best response so far on this forum that I’ve read. If this forum has assisted one person to abstain from Riba and gain the pleasure of Allah, it is well worth the endeavour.
Allah accept from you.
Question, upon realising this is haram, what should a person do with past winnings over the years?such as couple decades of accumulative winnings which can be thousands, I have contacted NS&I to find out the figure across 20 years, and it is several thousands which has been used. Do I now donate that amount from my savings to a charity?