Are the annual profits (5.50%) disbursed from an investment certificate considered Zakat on the principal amount, to be distributed among the poor, or should 2.50% of the principal amount be withdrawn as Zakat on wealth?

The profits from interest-based banks are forbidden (haram), and it is not permissible to deposit money in interest-based banks except in cases of extreme necessity, provided there is no Islamic alternative. In such cases, the deposit must be in a current account only.

Furthermore, money must be withdrawn from an interest-based bank if an Islamic bank becomes available, and any usurious profits must be disposed of by giving them to the poor and needy.

It is not permissible to pay Zakat from forbidden profits; instead, these profits must be disposed of. Zakat is to be paid from the principal amount of the wealth, at a rate of 2.5% annually on the total wealth, even if it is restricted or in an investment account.

Money must be withdrawn from an investment deposit and placed in an Islamic bank, or in a current account in an interest-based bank for the purpose of safekeeping, while monitoring the account.