Rabbi Meir Orlian
Writer for the Business Halacha Institute
Q: My employer paid me with a $2,000 check, postdated for ten days. I needed money immediately, so I went into a grocery store to which I owed $1,000 and asked the owner if he was willing to accept the check and give me cash. He agreed to apply $1,000 of it to the outstanding bill, give me $600 in cash, and put the remaining $400 into my account as a credit for future purchases.
There was a talmid chacham standing nearby when the owner made this offer, and he told me that I should check whether this arrangement would be considered ribbis (interest prohibited by the Torah). Is this arrangement permissible?
A: Halachically, this transaction is viewed as two distinct loans. The storeowner is lending you $600, which he will only recoup when the check becomes valid. (Even if the date were current, it would still be a loan because he wouldn’t have access to the funds until the check clears.) The $400 that he is applying as a credit to your account is a loan from you to him, because you are not getting goods worth that amount now.
Some Poskim rule that it is forbidden to lend money on condition that the borrower lend you money — even if the two loans are for the exact same amount and extended for the same amount of time — because the promise of a free loan in exchange for the first loan is itself ribbis. Other Poskim argue that it is only a problem if the second loan is extended for a longer period than the first, because then the first borrower is giving back more than he borrowed (Rema, Yoreh Dei’ah 160:9 cites both approaches). Some of the later Poskim rule stringently, forbidding this practice even if the second loan is identical to the first (Gra ibid. 16), and certainly if it was expressed clearly (katzatz) that this was a quid-pro-quo, which falls under the category of ribbis d’Oraisa (Shulchan Aruch HaRav, Dinei Ribbis 3).
In your case, it would seem that the storeowner agreed to extend you the $600 loan until the check is valid, on condition that you give him the $400 loan he applied as a credit to your account. This is certainly an issue according to the stringent opinion above, but even the lenient Poskim agree that it is a ribbis issue because your loan is for a longer period (the amount of time it takes you to use the $400 credit in your account) than the loan he gave you, which is only for a few days.
Nevertheless, in many instances, there would be no halachic issue with this arrangement, because the store owner didn’t actually condition his loan on you extending a loan to him. He would be willing to take your check even if you purchase $400 worth of groceries before the check clears, so that you don’t extend any loan to him. Therefore, although you generally wouldn’t spend that much in his store in such a short period of time, it is not considered ribbis ketzutzah, and because we know that the store owner isn’t doing this because he wants a loan from you, but because he doesn’t have more cash to give you now (or for a similar reason), there is no ribbis issue.
This does not contradict a ruling we issued earlier (BHI #394) that a storeowner may not lend money to someone on condition that he buy merchandise in his store. In that case, the lender is benefitting (receiving tovas hana’ah) from his loan by forcing the borrower to become his customer in exchange for that loan (see Yoreh Dei’ah 160:23 and Bris Yehudah ch. 11, fn. 56). In your case, because you are already a customer of this store, so the owner is not benefitting from issuing the loan, it is not ribbis.
We should note, in this context, that there could be a halachic issue with cashing a check in exchange for a percentage of the check or some other tovas hana’ah. The person cashing the check is, in effect, lending money to the person who gave it to him, who remains responsible for the validity of the check until it clears in the bank, unless the one cashing the check charges an insignificant amount that merely covers the time and effort he invests into dealing with it, but not a larger amount charged for giving the customer the cash in advance.
If the person cashing the check doesn’t hand over the money until the check clears, then there is no ribbis, because no loan is extended. Similarly, if he does offer the cash immediately, but tells him not to use it until the check clears, it is not an issue, because that money is considered a pikadon (something given over for safekeeping) until the check clears. (For more on this subject, see Mishnas Ribbis 13:13.)
