The price or rate paid by a debtor for the use of what he borrows.
Already in the second millennium B.C.E., Babylon had a fully developed loan system. The Code of Hammurabi indicates a 20-percent interest rate on money and grain, and it stipulates that a merchant charging a higher rate would forfeit the amount lent. By contrast God’s law to Israel prohibited making loans on interest to needy fellow Israelites. No one was to profit from another’s financial reverses. (Ex 22:25; Le 25:36, 37; De 23:19) And Proverbs 28:8 indicates that fortunes acquired from interest wrongfully collected would eventually become the possession of “the one showing favor to the lowly ones.”
Foreigners, however, could be charged interest by the Israelites. (De 23:20) Jewish commentators understand this to apply, not to cases of need, but to business loans. (The Pentateuch and Haftorahs, edited by J. H. Hertz, London, 1972, p. 849) Usually foreigners were in Israel only temporarily, often as merchants, and could reasonably be expected to pay interest, particularly since they would also be lending to others on interest.
Whereas upright Israelites obeyed God’s law about making interest-free loans (Ps 15:5; Eze 18:5, 8, 17), lending on interest apparently became common and brought hardships on needy debtors. (Ne 5:1-11; Isa 24:2; Eze 18:13; 22:12) Jesus Christ, though, upheld God’s law in this regard and gave it an even broader application, saying: “Continue . . . to lend without interest, not hoping for anything back.” (Lu 6:34, 35) It would therefore be improper to withhold assistance from a person who because of continued adversity and through no fault of his own might be unable to repay a debt. But when the loan is not needed to relieve poverty, there would be no objection to a person’s charging interest on a loan. Jesus himself, by having the wicked slave in one of his illustrations censured for failing to deposit his master’s money with the bankers so as to draw interest, implied that receiving interest from invested capital is proper.—Mt 25:26, 27; Lu 19:22, 23.