Interest is a way used to take unlawful money from people. If you borrowed $100 from someone, you would want to owe the same amount, not a penny more. you would not want to owe $110, unless you yourself reward him that amount. Islamic Banking is the way to go, as they are the only systems to survive the economic crises.
Banks such as Citi and HSBC have recently begun applying some of the concepts and are being among the successful in comparison with those who did not apply. something must be right in this system that is encouraging the banks to apply Islamic Banking. In Islamic Banking, you will not be cheated by the financing charges you whether it is $50 or even a penny. You will be charged the same amount of money you borrowed. Interest makes greed and encourages the taking of unlawful money from the people like you.
If by for any reason you make a late payment, late fees are prohibited. what can be done is increase the customers minimum payment in a way it does not exceed that amount the person owes in total. If payed on time the next time, the bank would give that person a discount, or lower the minimum payment as a reward.
Take mortgage for example, instead of loaning the buyer to purchase an item, the bank might buy the item from the seller and resell it for a profit and does not charge late penalties, as this is also usury gains. Many banks have taken heavy blows due to their unlawful ways of dealing with people and their money, while those who applied Islamic Banking have taken a limited blow.