Ribbis and Loan-Associated Costs


moneyQuestion: When I lend someone money, can I also charge him costs associated with the loan, such as cash advance charges, withdrawal fees, wiring costs, bounced check fees (if the repayment check bounces), etc.?

Answer: This depends on the nature of the cost. Interest charges that you paid to receive the money, such as cash advance charges, may not be passed on to the borrower. Although you had to pay interest to the credit card company to receive the cash advance, asking the borrower to cover that payment would be taking interest from him on the money you are lending him. (Bris Yehuda 9:2)

Costs that are not related to interest, however, such as standard bank withdrawal fees, wiring costs, and legal fees for drafting the loan document, can be transferred to the borrower. (C.M. 39:17; 106:1; Pischei Choshen, Halva’ah 2:42) If the repayment check bounces, the borrower is also responsible to reimburse the lender – unless an unforeseen, uncontrollable circumstance made it impossible for him to cover the check. This is because giving a check without coverage is a form of direct damage (garmi). (See Rama 14:5; Pischei Choshen, Halva’ah 2:41)

These articles are for learning purposes only and cannot be used for final halachic decision.

The Business Halacha email is a project of Business Halacha Institute (www.businesshalacha.com) and is under the auspices of Rav Chaim Kohn.

{Authored by Rabbi Meir Orlian}

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  1. I allowed someone to use my credit line. I wrote him a check and asked him to pay the bank directly each month whatever their charges were. In addition, just ot be safe,we executed a heter iska. Did we need the heter or by himpaying directly, he bypassed me?

  2. as far as the bank is concerned you are the debtor – any monies which are paid back are on your behalf – it turns out that you lent your friend the money and are charging him interest but instead of paying you back directly – you are telling him to pay somebody else on your behalf.

  3. No. 1:

    (1) He is paying your interest. this is ribis D’oraysah (even though he is the only beneficiary of the loan)
    (2) A heter Iskah is not an halachic contraption for getting around the issur ribis; it is really a business investment in which the lender stands to possibly lose some of his money. A heter ribis does not work for all situations
    If I were you, I would consult a compitent Rav
    or organization in order to structure this properly. You are dealing with an issur that is chamur ad meod! (it has olam habah implications)

    B’Ahavas Yisrael