Zakat on Locked Savings
The question of Zakat on locked savings confuses Muslims who have money in fixed deposits, term deposits, certificates of deposit, or notice period savings accounts that restrict immediate access. Do you owe Zakat on savings locked in a 12 month fixed deposit earning higher interest rates? What about three year term deposits with substantial early withdrawal penalties? Are notice period accounts requiring 60 or 90 days warning before withdrawal considered locked for Zakat purposes? How do temporary access restrictions affect the fundamental Zakat obligation on wealth you legally own? This comprehensive guide resolves all questions about Zakat on locked savings with authentic Islamic scholarship.
The critical principle for Zakat on locked savings centers on ownership versus accessibility. You legally own money in fixed deposits and term accounts. The bank holds it temporarily with your permission in exchange for higher returns. The lock is voluntary, temporary, and has a defined end date when you regain full access. This differs fundamentally from wealth that is stolen, lost, imprisoned, or locked by government regulation for decades like retirement accounts. The majority of Islamic scholars across all four major schools conclude that locked savings remain zakatable because ownership continues, lock terms are short, restrictions are voluntary, and theoretical early access exists despite penalties. This guide explains locked savings categories, scholarly positions, penalty considerations, maturity timing, calculation methods, and authentic Quranic and Hadith evidence.
Locked savings are zakatable: ownership matters more than temporary restrictions
The overwhelming majority scholarly position on Zakat on locked savings is clear: temporary voluntary restrictions do not eliminate Zakat obligation on wealth you own. When you deposit money into a fixed deposit or term account, you retain complete legal ownership. The bank is your agent holding your property temporarily. The restriction period is short, typically months to a few years. The lock date is known and predictable. You chose to lock the funds voluntarily for better returns. These factors distinguish locked savings from truly inaccessible wealth.
Islamic jurisprudence requires Zakat on wealth you own and possess. Locked savings meet both criteria. You own the principal and any returns. You possess it through your bank account relationship. The temporary inability to withdraw without penalty is a minor restriction, not complete inaccessibility. Most scholars compare locked savings to inventory held for trade or crops planted awaiting harvest. In both cases, immediate conversion to cash is difficult, but ownership is clear and Zakat is due. Include locked savings in your annual Zakat calculation at their full balance on your Zakat date.
Understanding
What locked savings are and why they differ from accessible savings
Understanding the nature and purpose of locked savings clarifies their Zakat treatment.
Fixed deposits and term deposit accounts
Fixed deposits, also called term deposits or time deposits, are savings products where you deposit money for a fixed period in exchange for guaranteed returns higher than regular savings accounts. Common terms range from one month to five years. During the term, you cannot withdraw the money without incurring penalties, typically forfeiting several months of accrued interest or paying a percentage fee. Banks worldwide offer these products under various names: fixed deposits in UK and Australia, certificates of deposit in USA, term deposits in Canada and New Zealand.
For Zakat on locked savings purposes, fixed deposits present the question of whether the lock period removes Zakat obligation. You deposited $50,000 into a two year fixed deposit. For 24 months, this money is locked. If you attempt early withdrawal, you lose six months of interest. Does this lock mean the $50,000 is not zakatable for two years? The majority scholarly answer is no. The money remains zakatable throughout the lock period because you retain ownership, the term is limited and known, and you voluntarily chose this restriction for financial benefit.
How fixed deposits work for Zakat calculation
On 1st March 2024, you deposited $80,000 into an 18 month fixed deposit maturing 1st September 2025. The deposit earns 4.5% annual interest. Your Zakat date is 1st Ramadan each year. On your Zakat date in March 2024, one month after depositing, the full $80,000 is zakatable even though locked for 17 more months. On your Zakat date in March 2025, the fixed deposit is still locked until September, but the principal plus accrued interest is zakatable. You include this locked balance with other assets and calculate Zakat on the total. The temporary lock does not exempt the wealth from Zakat.
Certificate of deposit accounts in United States
Certificates of deposit are the American equivalent of fixed deposits. Banks and credit unions issue CDs with terms from three months to ten years. Early withdrawal penalties vary but commonly equal three to twelve months of interest depending on CD term length. Some CDs have more severe penalties including partial principal forfeiture. Despite these penalties, Zakat on locked savings in CD form follows the same principle as fixed deposits. The CD is your property held temporarily by the institution. Include CD balances in zakatable wealth calculations.
American Muslims often ask whether FDIC insured CDs at banks or credit union CDs change the Zakat treatment. Insurance and institution type do not affect the fundamental ownership and Zakat obligation. Whether your CD is at Chase Bank, Bank of America, a local credit union, or an online bank like Marcus or Ally, the Zakat ruling remains the same. The locked CD balance is zakatable on your annual Zakat date regardless of where it is held or what penalties apply for early access. Learn more about savings treatment in our Cash and Savings guide.
Notice period savings accounts
Notice period accounts require advance warning before withdrawal, typically 30, 60, or 90 days. These accounts offer higher interest rates than instant access savings in exchange for the notice requirement. UK banks commonly offer notice accounts. You can initiate withdrawal at any time, but must wait the notice period before receiving funds. For Zakat on locked savings, notice accounts are clearly zakatable. The notice period is a minor procedural restriction, not a true lock preventing access.
Some notice accounts allow penalty-free immediate withdrawal by forfeiting interest for the notice period. Others require strict adherence to the notice period. Regardless of the specific mechanism, notice account balances are fully zakatable. If you have $35,000 in a 90 day notice account, include the entire $35,000 in your annual Zakat calculation. The fact that you cannot access it today but could access it in 90 days does not exempt current Zakat obligation. The wealth is yours, readily identifiable, and will be accessible soon.
Bonds and locked investment products
Some Muslims hold government bonds, corporate bonds, or locked investment products with maturity dates. Treasury bonds, savings bonds, corporate bonds, and similar instruments lock your principal until maturity. Secondary markets may exist allowing early sale, but at potentially significant discounts depending on interest rate movements. For Zakat on locked savings in bond form, the majority position includes bonds in zakatable wealth at their current value or face value depending on valuation method.
UK Premium Bonds present a specific locked savings scenario. While you can cash Premium Bonds anytime, the minimum holding period before entering prize draws creates a soft lock for optimization. Premium Bonds are clearly zakatable as accessible savings. Regular government bonds with maturity dates years in the future are similarly zakatable despite being locked until maturity. The bond certificate represents your wealth, you own it, and Zakat applies. See our Investments guide for detailed bond treatment.
Include all savings regardless of locks
Calculate Zakat on fixed deposits, term accounts, and all locked savings
Our calculator helps you total all savings including locked accounts for complete Zakat.
Calculate Your Zakat →Islamic jurisprudence
Why Islamic scholars require Zakat on locked savings
Understanding the scholarly reasoning behind the majority position on locked savings Zakat.
Ownership principle in Zakat jurisprudence
Classical Islamic jurisprudence establishes that Zakat applies to wealth you own with complete legal title. The four major schools of Islamic law, Hanafi, Maliki, Shafi, and Hanbali, all agree that ownership is the primary criterion. When you deposit money into a fixed deposit, you do not transfer ownership to the bank. The bank holds your money as an agent or trustee. The money remains legally and entirely yours. This continued ownership means Zakat on locked savings applies throughout the lock period.
Scholars distinguish between ownership and possession. You can own wealth without having it physically present. Merchants own inventory in warehouses. Farmers own crops in fields. Investors own shares held by brokers. In all these cases, Zakat applies despite the wealth not being immediately in hand. Locked savings follow the same principle. The money is in your account, in your name, legally yours. The bank cannot use it for its purposes without permission. This robust ownership makes locked savings clearly zakatable under classical and contemporary scholarly consensus.
Voluntary restrictions versus involuntary inaccessibility
Islamic scholars differentiate between voluntary and involuntary wealth restrictions when determining Zakat obligations. Voluntary restrictions you impose for your own benefit do not remove Zakat duty. Involuntary restrictions beyond your control may defer Zakat in some cases. For Zakat on locked savings, the lock is entirely voluntary. You chose to place money in a fixed deposit for higher returns. You selected the term length. You agreed to the penalty terms. This voluntary nature means you cannot claim inaccessibility to avoid Zakat.
Compare locked savings to truly involuntary inaccessibility. Wealth stolen by thieves is involuntarily inaccessible. Some scholars defer Zakat until recovery. Wealth confiscated by unjust rulers is involuntarily inaccessible. Wealth you are physically prevented from reaching due to war or natural disaster is involuntarily inaccessible. Fixed deposits and term accounts involve none of these elements. You voluntarily locked the wealth, retain full ownership, know the unlock date, and could access it early by accepting penalties you agreed to. This voluntary nature eliminates any scholarly basis for exempting locked savings from Zakat.
Short lock terms support Zakat obligation
Most fixed deposits have terms of one to three years, with some extending to five years. These are short periods compared to human financial planning horizons. Classical scholars who deferred Zakat on inaccessible wealth typically discussed scenarios where accessibility was uncertain or years away. A merchant's ship lost at sea might return in unknown months or years, or never. Locked savings have guaranteed return dates measured in months. This short predictable term means the wealth never truly leaves your economic control, supporting Zakat obligation throughout.
Penalty access distinguishes locked savings from locked retirement
A key distinction for Zakat on locked savings versus locked retirement accounts is theoretical early access. Fixed deposits allow early withdrawal by paying penalties. The penalties may be substantial, but the option exists. Retirement accounts in most countries have legal prohibitions on early access with extremely limited exceptions. Government pensions may be completely inaccessible until age requirements are met. This fundamental difference in theoretical access capability leads scholars to treat locked savings as zakatable while some defer retirement account Zakat until accessibility. Learn about retirement accounts in our Retirement Savings guide.
Growth and returns increase Zakat obligation
Locked savings in fixed deposits grow through interest or returns. The principal plus accrued gains both belong to you throughout the lock period. Islamic scholars note that when wealth is growing for your benefit, this strengthens rather than weakens the Zakat obligation. If you have $40,000 in a fixed deposit earning 5% annually, after one year you have $42,000 in value even if not accessible yet. For Zakat on locked savings, this growth principle means you calculate Zakat on the current value including accrued returns, not just the original principal.
Some Muslims ask whether they should exclude the accrued interest from Zakat calculation if they consider interest impermissible. This is a separate question from whether locked savings are zakatable. If you hold that the interest earned is impermissible wealth you must dispose of to charity, then calculate Zakat on the permissible principal only. If you hold that returns from conventional banks are permissible for Muslims in non-Muslim countries or that your fixed deposit is Shariah-compliant profit sharing, then calculate Zakat on principal plus returns. The underlying point is that locked savings themselves are zakatable regardless of the interest permissibility question.
Minority view on very long-term locked savings
A small minority of contemporary scholars suggest that locked savings with extremely long terms and severe penalties might approach the category of inaccessible wealth, potentially deferring Zakat until maturity. This opinion typically applies to unusual products like ten year locked deposits with principal forfeiture penalties, not to standard fixed deposits. Even these scholars acknowledge this is a minority position and recommend caution, suggesting Muslims follow the majority view requiring Zakat on all locked savings.
For practical Zakat on locked savings calculation, follow the overwhelming majority position that all fixed deposits, term accounts, CDs, and notice accounts are zakatable regardless of term length or penalties. This approach is safer for fulfilling religious obligation, supported by stronger evidence, and easier to implement consistently. If you have specific unusual locked savings products with terms exceeding five years and severe principal loss penalties, consult qualified scholars, but expect them to likely still require Zakat based on ownership principles.
Penalty treatment
How early withdrawal penalties affect Zakat on locked savings
Understanding whether penalties reduce zakatable balances or are ignored for Zakat purposes.
Penalties do not reduce current zakatable wealth
The most common question about Zakat on locked savings involves whether early withdrawal penalties reduce the zakatable balance. If your $60,000 fixed deposit would incur a $1,800 penalty if broken early, should you calculate Zakat on $60,000 or $58,200? The scholarly consensus is that you calculate on the full $60,000. The penalty is a contingent future cost that only materializes if you choose early withdrawal. On your Zakat date, you owe no penalty. The full balance is your property. Speculative future costs do not reduce present zakatable wealth.
This principle mirrors how Islamic scholars treat other contingent costs. A merchant owns inventory worth $100,000 but would incur $8,000 in shipping and selling costs to convert it to cash. Zakat is calculated on the $100,000 inventory value, not $92,000 net of future selling costs. A property investor owns land worth $500,000 but would pay $25,000 in agent fees and legal costs if selling. Zakat applies to the $500,000 value. Similarly, for Zakat on locked savings, calculate on the full balance without deducting penalties you have not incurred and may never incur if you wait for maturity.
Interest forfeiture penalties
Most fixed deposit early withdrawal penalties involve forfeiting accrued interest. A typical penalty structure requires giving up three to six months of interest if withdrawing before maturity. You have $50,000 in an 18 month fixed deposit earning 4.5% annually. After 12 months, accrued interest is $2,250. If you withdraw now, you forfeit six months interest equal to $1,125. For Zakat on locked savings purposes, the account value is the current $52,250 including accrued interest. Calculate Zakat on this full amount, not the reduced amount after hypothetical penalty.
Some banks structure penalties as forfeiting all accrued interest rather than a specific number of months. If your fixed deposit has earned $3,400 in interest over two years but early withdrawal forfeits all of it, you still calculate Zakat on principal plus the $3,400 accrued interest. The potential penalty does not reduce your current wealth for Zakat purposes. Only if you actually break the deposit and incur the penalty does your wealth decrease, which would be reflected in the following year's Zakat calculation.
Penalty calculation example
You deposited $75,000 in a three year CD on 1st January 2023 earning 5% annually with compounding. Early withdrawal penalty is 12 months interest. On your Zakat date 1st Ramadan 2025 (approximately March 2025), the CD has grown to approximately $82,650 over 26 months. If you withdrew early, you would forfeit about $4,100 in interest as penalty. However, you have not withdrawn early. On Zakat date, the account shows $82,650 value. You include this full $82,650 in your zakatable wealth calculation without deducting the theoretical $4,100 penalty. This is the correct approach for Zakat on locked savings with penalties.
Principal loss penalties in unusual products
Some unusual locked savings products impose penalties that affect principal, not just interest. Certain structured deposits or long-term CDs might require forfeiting a percentage of principal for very early withdrawal. These are rare in standard banking but exist in specialized products. For Zakat on locked savings with principal penalties, the same principle applies: calculate on full current balance including principal and returns without deducting theoretical penalties.
If you have a structured product worth $100,000 but early withdrawal within first year would reduce principal by 10%, you still calculate Zakat on $100,000. You have not withdrawn early, so have not lost the 10%. The wealth exists in full. If in some extreme case you are absolutely certain you will withdraw early and will definitely incur a specific penalty, you might consult a scholar about whether that certainty allows penalty deduction, but even then most would require Zakat on the full present balance.
Full balance Zakat calculation
Calculate Zakat on complete locked savings balances without penalty deductions
Include all fixed deposits and term accounts at their full current value.
Use Zakat Calculator →Timing scenarios
Maturity dates, rollover, and Zakat date coordination
How to handle locked savings that mature before, during, or after your Zakat date.
Fixed deposits maturing before your Zakat date
If a fixed deposit matures and you receive the funds before your Zakat date, the money transitions to regular accessible savings. You had $45,000 in a 12 month fixed deposit that matured three months before your Zakat date. At maturity, you received $47,000 including interest. These funds moved to your regular savings account. On your Zakat date, the $47,000 is clearly zakatable as accessible cash. The fact it was recently in a locked deposit is irrelevant. Calculate Zakat on wherever the money is now.
If you roll over a maturing fixed deposit into a new fixed deposit before your Zakat date, both the old and new deposits are zakatable. You had $50,000 maturing, rolled it into a new $50,000 fixed deposit with higher rates. On Zakat date, you have $50,000 in the new locked deposit. Include this amount in Zakat calculation. The rollover does not restart any Zakat calculation or create exemption. For Zakat on locked savings, rollovers are treated as continuous ownership of the wealth in different forms.
Fixed deposits maturing after your Zakat date
When your fixed deposit matures after your Zakat date, include the full balance in current year Zakat calculation even though it is still locked on Zakat date. You have $38,000 in a fixed deposit maturing four months after your Zakat date. On Zakat date, the account shows $38,950 including accrued interest. Calculate Zakat on this $38,950. The upcoming maturity is irrelevant. Your Zakat date is the snapshot moment for wealth calculation. The deposit is your property on that date, therefore zakatable.
Muslims sometimes ask whether they should wait to pay Zakat until the fixed deposit matures and becomes accessible. This is incorrect. Zakat is due on your chosen annual Zakat date based on wealth you own on that specific date. If locked savings are part of your wealth on Zakat date, Zakat is due even if you must pay from other accessible funds while the locked savings remain restricted. The alternative of delaying Zakat until maturity breaks the annual Zakat cycle and contradicts the fundamental timing principles. Pay Zakat on time using accessible wealth, letting locked savings contribute their proper share when they mature.
Multiple fixed deposits with staggered maturities
You use a laddering strategy with five fixed deposits: $20,000 maturing every six months over the next two years. On your Zakat date 1st Ramadan, you have five fixed deposits totaling $100,000 in various stages. First deposit matures in one month, second in seven months, third in thirteen months, fourth in nineteen months, fifth in twenty-five months. For Zakat on locked savings with this structure, total all five deposits at their current values on Zakat date. Calculate Zakat on the complete $100,000 regardless of different maturity timings. Each deposit is your property on Zakat date, making all zakatable. Learn more about managing complex savings in our Cash and Savings guide.
Coordinating Zakat payment with locked savings liquidity
Some Muslims structure their locked savings to provide liquidity around their Zakat date for easier payment. If your Zakat date is 1st Ramadan and you owe substantial Zakat including on locked fixed deposits, you might arrange one fixed deposit to mature during Ramadan. The matured funds become available precisely when needed for Zakat payment. This planning is permissible and wise but does not change the calculation. All locked savings are zakatable on Zakat date, and the strategic maturity timing simply facilitates payment.
If all your wealth is in locked fixed deposits with no accessible funds for Zakat payment, you face a liquidity challenge. The locked deposits are zakatable under majority position, but you cannot access them to pay Zakat without penalties. In this situation, you can either pay Zakat from other income that arrives after Zakat date, break one fixed deposit accepting the penalty to obtain Zakat payment funds, or coordinate future Zakat dates with deposit maturity schedules. The obligation exists regardless of liquidity difficulties. Plan ahead to ensure ability to fulfill Zakat on locked savings without excessive hardship.
Real scenarios
Detailed examples of Zakat on locked savings calculation
Step by step walkthroughs showing exactly how to include locked savings in Zakat.
Single fixed deposit with standard penalty
Background: Hassan has $65,000 in a two year fixed deposit at Chase Bank earning 4.2% annually. He deposited the money 14 months ago. Early withdrawal penalty is six months of interest. His Zakat date is 15th Shaban. He has other zakatable wealth including regular savings and investments.
Fixed deposit details on Zakat date: Original deposit: $65,000. Time elapsed: 14 months. Accrued interest at 4.2% for 14 months: approximately $3,185. Current fixed deposit value: $68,185. Maturity date: 10 months from now. Early withdrawal penalty if broken: approximately $1,365 (six months interest).
Other zakatable wealth: Checking account: $8,400. Regular savings account: $12,600. Stocks: $18,500. Gold: $4,200. Total other assets: $43,700.
Complete Zakat calculation: Locked fixed deposit: $68,185. Other accessible assets: $43,700. Total zakatable wealth: $111,885. This total far exceeds nisab and has been above nisab for full lunar year. Zakat due: $111,885 × 0.025 = $2,797.13. Hassan pays $2,797 from accessible funds, not breaking the fixed deposit.
Key insight about Zakat on locked savings: Hassan included the full $68,185 fixed deposit value without deducting the theoretical $1,365 penalty. He paid Zakat from accessible savings without disrupting the locked deposit. When the deposit matures in 10 months, the funds will be available for next year's Zakat calculation as accessible wealth.
Multiple CDs with different maturity dates
Background: Aisha uses CD laddering strategy for savings. She has five CDs at different banks totaling $85,000 with maturities spread over 30 months. Her Zakat date is 1st Ramadan. She wants to understand how to handle multiple locked savings with different terms for Zakat calculation.
CD portfolio on Zakat date: Bank of America 6 month CD: $15,000 maturing in two months. Marcus 12 month CD: $18,000 maturing in eight months. Ally Bank 18 month CD: $20,000 maturing in fourteen months. Discover 24 month CD: $17,000 maturing in twenty months. Capital One 30 month CD: $15,000 maturing in twenty-six months. Total across all CDs: $85,000.
Other zakatable wealth: Checking account: $5,200. Money market account: $11,800. Bitcoin: $6,400. Total accessible assets: $23,400.
Zakat calculation combining locked and accessible wealth: Total locked CDs: $85,000. Accessible assets: $23,400. Complete zakatable wealth: $108,400. Zakat due: $108,400 × 0.025 = $2,710.
Key insight about Zakat on locked savings: Aisha includes all five CDs regardless of different maturity dates. She does not exclude CDs maturing far in the future. The laddering strategy creates ongoing liquidity through staggered maturities, but all CDs are zakatable on each Zakat date. As CDs mature throughout the year, she can use matured funds for expenses or roll them into new CDs. Learn more about cryptocurrency Zakat in our Crypto guide.
Notice period account combined with fixed deposits
Background: Bilal has diversified savings across different products. He has a 90 day notice account in UK, a one year fixed deposit, and regular instant access savings. His Zakat date is 1st Dhul Hijjah. He needs to calculate Zakat on locked savings across these different products.
Locked and restricted savings breakdown: Nationwide 90 day notice account: £42,000 requiring three months notice before withdrawal. Santander one year fixed deposit: £28,000 with ten months remaining until maturity. NatWest instant access saver: £15,300 with no restrictions. Total savings: £85,300.
Other zakatable wealth: Current account: £6,800. Premium Bonds: £10,000. Stocks and shares ISA: £22,400. Total other assets: £39,200.
Complete Zakat calculation: Notice account £42,000 plus fixed deposit £28,000 plus instant access £15,300 equals £85,300 in savings. Add other assets £39,200. Total zakatable wealth: £124,500. Zakat due: £124,500 × 0.025 = £3,112.50.
Key insight about Zakat on locked savings: Bilal treats the notice account and fixed deposit as zakatable despite restrictions. The 90 day notice is a minor procedural requirement, not true inaccessibility. The fixed deposit with ten months remaining is his legal property and zakatable. He includes all three savings products without distinction based on access restrictions, paying Zakat from the instant access savings and current account.
Fixed deposit maturing month before Zakat date
Background: Fatima had $55,000 in an 18 month fixed deposit that matured one month before her Zakat date. She must decide whether to roll it over into a new deposit or leave it in accessible savings. She wants to understand how timing affects Zakat on locked savings obligation.
Timeline and decisions: Fixed deposit matured 15th February: received $58,100 including interest. Zakat date is 15th March. She has three weeks to decide whether to start a new fixed deposit or keep funds accessible. She chooses to put $50,000 in a new two year fixed deposit and keep $8,100 in regular savings.
Wealth on Zakat date 15th March: New fixed deposit started early March: $50,000. Regular savings including portion from matured deposit: $14,300 ($8,100 from old deposit plus $6,200 existing savings). Checking account: $7,600. Stocks: $16,800. Total zakatable wealth: $88,700.
Zakat calculation: Total wealth $88,700. This exceeds nisab and was maintained above nisab for full year. Zakat due: $88,700 × 0.025 = $2,217.50. Fatima pays $2,218 from accessible funds.
Key insight about Zakat on locked savings: The fact that Fatima's original fixed deposit matured recently does not create confusion. On Zakat date, she simply calculates on current wealth. The new locked $50,000 deposit is fully zakatable despite being just opened. The accessible savings are zakatable. The continuous ownership and Zakat obligation mean timing of deposits and rollovers does not interrupt annual Zakat calculation. Learn more about investment Zakat in our Investments guide.
Simple comprehensive calculation
Calculate Zakat on all savings both locked and accessible together
One annual calculation covering fixed deposits, CDs, notice accounts, and regular savings.
Calculate Your Zakat →Islamic evidence
Quran and Sahih Hadith establishing Zakat on owned wealth
Authentic textual sources proving Zakat applies to wealth you own regardless of temporary restrictions.
Quran
And give Zakat from your wealth
Quran 9:103
Allah commands giving Zakat from wealth to purify it. Locked savings in fixed deposits and term accounts are wealth you own. Temporary voluntary restrictions do not change ownership status. Include locked savings in Zakat calculation based on this clear command to purify all owned wealth.
Quran
Establish prayer and give Zakat
Quran 2:43
Zakat is commanded alongside prayer as a fundamental obligation. The requirement applies to wealth meeting nisab threshold for one lunar year. Locked savings that you own and that exceed nisab for hawl are subject to this obligation regardless of deposit terms or withdrawal restrictions.
Quran
Rights of those who ask in your wealth
Quran 51:19
The needy have rights in believer wealth. Fixed deposits earning returns in your name are your wealth. The fact that banks hold the money temporarily under deposit agreements does not remove the wealth from your ownership or eliminate the rights of the needy to receive Zakat from it.
Quran
Those who hoard gold and silver
Quran 9:34
Severe warning for those who hoard wealth and do not spend in Allah's path. Locking money in fixed deposits to earn returns is a form of wealth accumulation. This verse emphasizes that accumulated wealth must fulfill Zakat obligations, supporting the position that locked savings are zakatable.
Hadith
Islam built on five including Zakat
Sahih al-Bukhari 8
The Prophet (peace be upon him) established Zakat as a pillar of Islam obligatory for those with qualifying wealth. When you own wealth in fixed deposits exceeding nisab for one lunar year, the pillar obligation applies. Deposit lock terms are irrelevant to the fundamental ownership-based Zakat duty.
Hadith
Zakat purifies wealth and increases it
Sahih Muslim 2588
The Prophet (peace be upon him) taught that charity does not decrease wealth and Zakat purifies it. Locked savings in fixed deposits grow through interest or returns. Paying Zakat from accessible funds on these locked savings purifies them even while locked, maintaining the spiritual benefit of Zakat obligation.
Hadith
Zakat is a right in wealth
Sahih al-Bukhari 1395
The Prophet (peace be upon him) taught that Zakat is a right Allah placed in the wealth of the rich. When you deposit money in fixed deposits, you remain rich in those funds. The bank holds them on your behalf, they earn returns for your benefit, and the Zakat right continues throughout the deposit term.
Hadith
Wealth must complete one year for Zakat
Sunan Abu Dawud 1573
The Prophet (peace be upon him) clarified that wealth must remain in possession for one complete lunar year before Zakat is due. Locked savings in multi-year fixed deposits easily meet this hawl requirement. Calculate Zakat annually on fixed deposit balances that have been in your ownership for the full lunar year.
Classical scholarly consensus on owned wealth accessibility
The four major schools of Islamic jurisprudence developed detailed rules on Zakat for various wealth categories. Hanafi scholars required Zakat on trade goods held in inventory despite them not being immediately liquid cash. Maliki scholars required Zakat on crops planted but not yet harvested, despite the produce being inaccessible until harvest season. Shafi scholars required Zakat on debts owed to you by others even if collection was difficult, based on ownership. Hanbali scholars required Zakat on wealth held by agents or partners on your behalf. The consistent thread across all schools and scenarios is that legal ownership triggers Zakat obligation, with accessibility being a secondary consideration. Locked savings in modern banking mirror these classical scenarios: you own the wealth legally, it is held by an agent bank, it earns returns for your benefit, and the restriction is temporary and voluntary. This aligns perfectly with classical consensus requiring Zakat on locked savings throughout the deposit term. The minority historical opinions that deferred Zakat in extreme inaccessibility cases involved scenarios like wealth confiscated by tyrants, stolen by bandits, or lost in shipwrecks where accessibility was uncertain or permanently denied, fundamentally different from predictable short-term fixed deposit locks.
FAQ
Frequently asked questions about Zakat on locked savings
Direct answers to the most common questions Muslims have about fixed deposits and Zakat.
Do I pay Zakat on locked savings I cannot access yet?▾
Yes, under the majority scholarly position. Most Islamic scholars rule that locked savings in fixed deposits or term accounts are zakatable because you retain legal ownership and the lock is temporary and voluntary. Unlike retirement accounts locked by law for decades, locked savings typically have short terms of months to a few years with predictable access dates.
Are fixed deposit accounts zakatable even though I cannot withdraw early?▾
Yes. Fixed deposits are zakatable wealth under the majority position. The fact that early withdrawal incurs penalties does not remove Zakat obligation. You own the money, it is growing for your benefit, and the lock period is usually short. Calculate Zakat on the full fixed deposit balance including accrued interest if the interest itself is permissible to own in your understanding.
What if locked savings have severe early withdrawal penalties?▾
Penalties do not eliminate Zakat obligation under majority position. Even if breaking a fixed deposit early means losing six months of interest, the principal remains your accessible property. You could withdraw if necessary by accepting the penalty. This theoretical ability to access makes locked savings different from truly inaccessible wealth like locked retirement accounts.
Do notice period savings accounts require Zakat?▾
Yes. Notice period accounts requiring 30, 60, or 90 days notice before withdrawal are zakatable. The notice period is a minor restriction, not true inaccessibility. You own the funds, they are in your name, and you can initiate withdrawal at any time by giving notice. Include full balance in annual Zakat calculation.
Can I deduct the penalty amount from my zakatable locked savings?▾
No under most scholarly opinions. The penalty is a potential future cost if you choose early withdrawal, not an actual debt you currently owe. Your locked savings balance is zakatable at its full amount. Speculative future penalties do not reduce current zakatable wealth.
What about locked savings that mature after my Zakat date?▾
Include them in your Zakat calculation. If you have a 12 month fixed deposit that matures three months after your Zakat date, the full balance is still zakatable on your Zakat date. The upcoming maturity date does not change the fact that you own this wealth now.
Are certificate of deposits CD accounts zakatable?▾
Yes, under the majority position. CDs are essentially fixed deposits with term locks ranging from months to years. Despite being locked until maturity, you own the CD, it appears in your wealth, and the term is limited. Most scholars include CD balances in zakatable wealth calculations.
What if I locked my savings to prevent myself from spending?▾
Self-imposed locks for discipline do not remove Zakat obligation. If you put money in a fixed deposit specifically to avoid temptation to spend, this voluntary restriction does not make the wealth non-zakatable. You chose the lock, retain ownership, and the money remains your property subject to Zakat.
How do I calculate Zakat on multiple locked savings accounts?▾
Total all locked savings accounts on your Zakat date. Add fixed deposits, term deposits, CDs, and notice accounts to your other zakatable wealth like regular savings, checking accounts, investments, and gold. Calculate 2.5% Zakat on the combined total if it exceeds nisab and was maintained above nisab for one lunar year.
Is there a minority position that exempts locked savings from Zakat?▾
A small minority of scholars suggest very long-term locked deposits with severe penalties might be treated like inaccessible wealth, but this is not the mainstream position. The overwhelming majority of Islamic scholars across all schools require Zakat on locked savings due to continued ownership, short lock terms, and voluntary nature of the restriction.
Implementation
Practical steps for managing Zakat on locked savings
How to track fixed deposits, calculate correctly, and pay Zakat efficiently.
1. Maintain a complete fixed deposit register
Create a spreadsheet or document listing all fixed deposits and locked savings. Record bank name, account number, principal amount, interest rate, deposit date, maturity date, and early withdrawal penalty terms. Update this register when opening new deposits or when existing ones mature. Having complete records makes annual Zakat calculation straightforward.
2. Obtain current balance statements before Zakat date
Contact your banks or check online banking to get current fixed deposit balances including accrued interest. Most banks provide statements showing current value. Obtain these one week before your Zakat date so you have accurate figures. For Zakat on locked savings, you need the actual balance on Zakat date, not the original deposit amount.
3. Include all locked savings in one total
Add together all fixed deposits, CDs, term deposits, and notice accounts to create one locked savings total. Then add your accessible savings, checking accounts, and other zakatable assets. Calculate 2.5% Zakat on the complete total. Do not calculate separately on locked versus accessible savings. Our main calculator helps organize this.
4. Maintain accessible funds for Zakat payment
If most of your wealth is in locked savings, ensure you have sufficient accessible funds to pay Zakat without breaking deposits and incurring penalties. Plan ahead by keeping some savings accessible or timing fixed deposit maturities near your Zakat date. The Zakat obligation exists regardless of liquidity, so plan to fulfill it efficiently.
5. Do not deduct penalties from calculations
Calculate Zakat on full fixed deposit balances without subtracting theoretical early withdrawal penalties. The penalties are contingent costs you may never incur. Only actual current debts reduce zakatable wealth, not speculative future costs. This keeps calculation simple and aligns with majority scholarly position on Zakat on locked savings.
6. Track matured deposits in annual cycle
When fixed deposits mature during the year, note whether you rolled them over, withdrew them to accessible savings, or used them for expenses. This helps explain year-over-year changes in your zakatable wealth. Good records prevent confusion and ensure accurate ongoing Zakat calculation as deposits mature and new ones are opened.
Core principle for Zakat on locked savings
The fundamental principle for Zakat on locked savings is straightforward: ownership determines Zakat obligation, not accessibility. When you own money in fixed deposits, term accounts, CDs, or notice period savings, this wealth is fully zakatable on your annual Zakat date. The voluntary temporary restrictions you accepted for higher returns do not eliminate or defer Zakat duty. Calculate Zakat on complete locked savings balances without penalty deductions. Pay from accessible funds if needed. Include locked savings alongside all other zakatable wealth in your annual calculation. This approach aligns with classical Islamic jurisprudence consensus across all major schools and ensures you fulfill the pillar obligation of Zakat correctly on all wealth you own.
Distinctions
How locked savings differ from other restricted wealth categories
Understanding what makes locked savings zakatable versus truly inaccessible wealth.
Locked savings versus locked retirement accounts
The key distinction for Zakat on locked savings compared to locked retirement accounts like superannuation, 401k, or pension funds is the nature and duration of the lock. Fixed deposits lock your money voluntarily for months to a few years with known maturity dates and penalty-based early access. Retirement accounts lock money by government regulation for decades until retirement age with extremely limited emergency access exceptions. The voluntary short-term nature of savings locks versus mandatory multi-decade retirement locks leads scholars to treat them differently.
Majority scholarly position holds that locked savings in fixed deposits remain zakatable throughout the term because you retain complete ownership and control over a short predictable period. The same majority position often exempts locked retirement accounts from current Zakat because decades of government-mandated inaccessibility removes practical ownership despite legal title. This distinction is consistent across Islamic jurisprudence: voluntary temporary restrictions do not defer Zakat, but involuntary long-term inaccessibility may defer it in some scholarly opinions. Learn more in our guides on retirement savings, 401k, and superannuation.
Locked savings versus unvested stock options
Employee stock options that have not vested are another category of restricted wealth. You have a future right to stock if you remain employed, but do not yet own the options. Unvested options are generally not zakatable because ownership has not transferred. Once options vest, you own them and they become zakatable even if there are exercise restrictions. This differs from locked savings where you already own the deposited money from the moment of deposit. Fixed deposits are fully owned immediately, making them zakatable. Unvested options are not yet owned, making them non-zakatable until vesting.
Locked savings versus restricted shares
Restricted stock units or restricted shares given to employees vest over time and may have sale restrictions even after vesting. Once restricted shares vest and you own them, they become zakatable even if you cannot sell them immediately due to insider trading windows, lock-up periods, or contractual restrictions. The ownership creates Zakat obligation despite sale restrictions. This parallels locked savings: ownership matters more than trading or access restrictions. Both restricted shares after vesting and locked fixed deposits are zakatable because you own them, regardless of restrictions on accessing or liquidating them.
Locked savings versus escrow funds
Money held in escrow for a transaction is locked but presents different ownership questions than fixed deposits. If you are buying a property and deposit funds in escrow pending completion, those funds are locked but still yours. If the transaction completes, escrow funds transfer to the seller. If the deal falls through, funds return to you. For Zakat on locked savings versus escrow, the key is whether you still own the money. Pre-completion escrow funds remain your property and are zakatable. This is similar to fixed deposits where you retain ownership throughout.
The difference is that escrow represents funds allocated for a specific imminent transaction while fixed deposits are savings for general purposes. Both are zakatable because ownership continues, but the intended use differs. Fixed deposits are wealth accumulation subject to Zakat. Escrow funds transitioning to property purchase may soon become property ownership, also zakatable but in different form. The principle remains: locked funds you own are zakatable.
Locked savings versus frozen bank accounts
Bank accounts frozen by court order, government investigation, or banking restrictions present involuntary inaccessibility unlike voluntary fixed deposit locks. If your account is frozen by authorities and you cannot access funds despite owning them, this may qualify for Zakat deferral under some scholarly opinions treating it like stolen or confiscated wealth. However, if you know the freeze is temporary and will be lifted after investigation or legal proceedings, some scholars still require Zakat.
The key distinction for Zakat on locked savings is voluntary versus involuntary restriction. You chose to lock money in a fixed deposit for your benefit. Frozen accounts restrict you against your will for external reasons. Most scholars would treat voluntary locks as still zakatable and might defer Zakat on involuntary freezes until accessibility is restored. For standard banking situations, frozen accounts are rare and temporary, so practical impact on Zakat is minimal. Fixed deposits are common and clearly zakatable throughout their terms.
Ready to calculate correctly
Calculate your Zakat including all locked savings and fixed deposits
Stop wondering whether fixed deposits are zakatable. The majority scholarly consensus is clear: locked savings in fixed deposits, term deposits, CDs, and notice accounts are fully zakatable on your annual Zakat date. Calculate Zakat on complete balances including accrued returns without deducting theoretical penalties. Use our comprehensive calculator to total all zakatable wealth including locked and accessible savings together.
Related guides for savings and wealth categories
Disclaimer: This guide provides general educational information about Zakat on locked savings based on majority scholarly positions from the four major schools of Islamic jurisprudence. Individual circumstances vary significantly based on fixed deposit types, term lengths, penalty structures, notice period requirements, certificate of deposit terms, structured product features, bank-specific policies, early withdrawal options, rollover arrangements, maturity timing relative to Zakat dates, and personal financial situations. For questions about unusual locked savings products including structured deposits with principal at risk, very long-term deposits exceeding five years, inflation-linked deposits, foreign currency fixed deposits, Islamic profit-sharing deposits versus interest-bearing conventional deposits, or complex penalty structures involving principal forfeiture, consult qualified Islamic scholars who understand both Islamic commercial jurisprudence and modern banking products. This guide aims to help Muslims understand and fulfill Zakat obligations correctly on standard locked savings products using established Islamic principles applied to contemporary banking structures that have existed in various forms for centuries. The majority scholarly consensus requiring Zakat on locked savings is well-established, robust, and applicable to virtually all common fixed deposit and term deposit products offered by banks globally.
About this Content
Written by the Zakat Finance editorial team. All content is based on authentic Islamic scholarship and is reviewed regularly to ensure accuracy. The content aims to provide guidance on Zakat calculation and does not replace advice from a qualified Islamic scholar.
Last updated: February 2026
Method note: We present common scholarly approaches to Zakat calculation, encouraging consultation with trusted scholars for personal cases.