Monzer Kahf, a prominent Muslim economist and counselor states:
“If a Muslim happen to live in an area where an Islamic bank is accessible, then they should use its facilities to open an account and other services unless it costs you much more than normally charged by other banks.
But on the contrary, if a Muslim happen to have earned interest, such interest must be given to the Muslim needy, preferably through Muslim charitable organizations. You cannot use it for any personal things, including payment of taxes or of interest you may have contracted with a riba-based institution. The reason is that earned interest is not yours and the contract via which you earn interest is not valid from the Shari`ah point of view. This means that it is still owned by the bank that gave it to you. But we do not leave it to the bank because it is interest-ridden (we then would be helping it do more evil). We have to treat it as money that has no owner; give it to charity. You will be rewarded for keeping your own money and finance pure from the evil of riba, but it is not considered a sadaqah.”