How interest-free banking works: The case of JAK
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Therefore, they demand as their fee that you pay the opportunity cost of the interest you would have earned by keeping your money in another bank.
I don't really see the point. All banks do need to charge interest, true, but the least they can do is charge you it in a fair and straightforward manner. Normal banks charge you, but at least they are explicit about what they are charging you, whereas this one charges you in an abstruse way that you need training as an economist in order to understand fully.
That is, every year around tax time (in the USA), I see several people trumpeting about how folks who get tax refunds did it wrong. "You should have taken a larger paycheck and put the surplus in an interest-bearing account!", they always exclaim. And they're right. People should have done that. But most people wouldn't have. A tax refund ends up being like an unseen piggy bank for a lot of people. They're not earning interest on that money, but at least they're saving it and not spending frivolously. Without that unseen piggy bank though, a lot of people wouldn't have the discipline to save that money.
If they were using the deposits to make interest earning investments for profit then that would be a slightly different matter, but they are not, they are using it to make interest free loans.
The key point is that they do not make profit. They could do this at any interest level, from zero up, as long as their deposits balanced their loans. If they chose to make a profit then they would need an imbalance between the interest on their loans and the interest on their deposits, and then there would be a net interest charged. The other sources of interest are inflation and defaults, and from what I can work out they do make investments with some of the deposits, precisely to cover these liabilities.
However I think the real interest rate for your loan is much lower in this type of bank. There is no profit.
Could anyone work out the exact rate.
P.s Most current accounts in U.K/Ireland pay abysmal rates of interest
The true effective interest rate varies with time so the answer to your question would be a set of equations.
Professor Stefan Yard at Lund University in Sweden has made a calculation with a 10-year JAK loan, and compares it to borrowing money in a normal bank for 5 years and then saving money in the same bank for 5 years without interest (this is how a 10 year JAK loan work)
The effective interest rate of the JAK loan is then 6.5% which is higher than the normal bank.
Source: Use e.g Google translate to read http://www.jordensvanner.se/2012/gar-det-att-driva-bank-utan...
I unbanked many years ago (a decade now?) and the only practical local difference between a bank and my credit union is the CU is non profit and unsurprisingly the related fees and interest rates are microscopically more consumer friendly, and arguably less of a "screw the customer to earn your paycheck" attitude exists so in a fluffy and subjective manner customer service seems a lot better. Thats it. They still pay and charge interest, just better rates than a for profit bank, etc. No fooling around with a fake currency of "points".
I have no idea why any locals do business with a for profit bank, other than maybe some conspicuous consumption thing to prove the can afford to make the bank shareholders richer. "In the old days" CUs had strict membership requirements like "military veteran" or "holder of teachers license" (no kidding). My local CU membership requirement is "mailing address at time of account opening within same county as CU branch". That's it.
There are two interesting aspects of "points". Not being legal currency I imagine the tax implications are bizarre, probably more of a pain than bitcoins. And the article didn't touch on "points" being inheritable or taxable. So assuming old people live in apartments and forfeit their point collection at death, that is an income stream situation that was not discussed.
When I switched to my CU I asked about opening a CD with some funds from my account and 30 seconds later it was done. I switched all of my business over to the CU that week and closed my account with my bank and never looked back or regretted it. All the dumb little nonsense I had to deal with with my bank is all gone poof and banking with my CU has been more or less a pleasure.
IT as a service is not unusual in finance. More than two decades ago I worked at a stock trading outsourcer, based in the USA believe it or not, who for a fee, would do absolutely everything computer related for a small brokerage office from trades to research to even printing payroll checks (so I'm told, maybe it was just calculating commission checks?)
Another example is supposedly the majority of direct stock investment plans are outsourced to one provider (compushare?) That's the deal where if you live at an address that pays an electric company bill, you're auto-qualified to buy shares in the electric company directly without paying commission or going thru a brokerage. I've been in the that ownership plan since I was 12 or 14 or so, which reminds me to sign my kids up soon.
http://www.bankofengland.co.uk/publications/Documents/quarte...
Funny how people always find ways around prohibition.
In modern Sweden, you are debt free in 5 years only, not seven, by invoking "skuldsanering".
Paraphrasing you, modern Sweden has a system promoting mercy and hope even for those who lost everything and the Jubilee law meant creating oppression and exploiting the poor.
In ancient Israel, real estate was forbidden to be permanently 'sold'. You could lease it out for 50 years, but at the Jubilee, it would return back to the family.
Good to hear Sweden has as good, (perhaps better?) access to such facilities.
I also think you misunderstand what aruggirello meant.
I've seen it argued that Islam's real problem is that they have too good sources -- it is harder for those followers to skip those of God's eternal commands which don't work in the modern world...
(The most important feature of a working religion -- selective amnesia when rewrit... reinterpreting it? :-) )
If you're not trying to be funny or follow some left wing variant, but really argue for a fundamentalist sharia state or similar, then I'll say:
"Have fun with tolerated slavery, oppressed women, maiming of thieves and religiously mandated hatreds. Welcome to the light when you leave the dark ages."
I can and know muslims who are not like that.
To you I say: 'Those who cannot remember the past are condemned to repeat it'.
I also know some muslims. Without witnesses many are about as religious as I am, but most can't do that in public. At an absolute minimum they'd get social problems (ostracism) if they came out of the closet. In worst case, physical danger. Often even their relatives would get problems.
Edit: To give an example [After consideration, I removed this. Sorry, but I can't break confidence and risk that someone identifies my friends -- see previous paragraph. But do Google "enemy property act" for an interesting read, re Bangladesh.]
My original point was that it is harder for Muslims to just throw away the crazy/inhumane parts of their eternal Truths, since they've got better sources than a set of mutually contradictory books/testaments. So the extreme stuff tends to get back into circulation -- see the social control etc from the 2nd paragraph why that is hard to stop, there is a pressure to be "good" (there is some form of race to the bottom of being holier than thou).
The end result is that it is hard to take your suggested third option.
Was this clear enough?
And your last message to me -- right back at ya...
My point is that your view on muslims and religion in general to me seems so prejudiced that you can't seem to accept an honest anecdote by a fellow programmer from a different culture and mindset at face value without branding it a joke, a left wing oddity or full-on taliban. It's shocking to me that someone in the name of reason gives a nasty response to a well-meant comment. Prejudice and ignorance is one thing, but it's bigotry when you suggest asadlionpk is supportive of a culture of slavery, oppression of women and hate just for his remark that he's is doing fine with following the eternal law of God in this regard.
Yes, of course I can see the problems religion has with modernity and the problems it causes for society (the eternal law of interest-free banking is not one of them) and also the problems of social pressure. But a sizable chunk - lots of people I know - in this age of reason have learned to balance both internally and have chosen this belief consciously: your literally hard to take third option.
Other examples of these are for example people like imam Afroz Ali (whose esteemed teacher lives under a tree) or Tariq Ramadan. In these links they talk about economic reform inspired by the eternal laws of Islam: http://seekersguidance.org/islamcast/economy-poverty-and-the... http://www.salon.com/2002/02/15/ramadan_2/
I have little reason to believe asadlionpk assumes women shouldn't study or gays should be imprisoned. It's also irrelevant as he was just responding to your side note that some so-called 'eternal laws' don't seem to work in this day and age.
The reason I respond like this is because this way of responding to others in the name of enlightened reason is causing problems in my society at the moment. People even talking about leaving the country because they don't feel accepted in their faith and ethnicity. People feeling obligated to make 'happy muslim' video's to counter this mindset. It's not even my faith, as I am christian, but even I have to explain the so called crime of teaching my children about God. A God which is far removed from the deist human like entity you think muslims and christians believe in.
Have I understood you correctly? I hope you understand and respect my strong worded response.
I didn't argue that even the majority of muslims in the West are extremists, in e.g. Bosnia they had modern Islam. (But do check statistics in different countries about antisemitism, homophobia, etc. Also, see support for AlQ, before they started to kill too many muslims. Or the high number of votes for religious parties in many/most muslim countries.)
You answered by calling me intolerant and discussed how attitudes hurt yours/others feelings. Those aren't arguments, it is emotions. My girlfriend gets away with that, I expect better on HN.
If you want to move, consider Sweden.
The media there stamp Denmark and Norway as racist/fascist influenced (those are certainly on the top ten lists of most tolerant countries on the planet). The media is at the same time much, much milder about the intolerance preached in many mosques, so they have insane double standards. The Social democrat party almost put an islamist in the party board, until the media for once reacted. But don't worry, it is only religious homophobes and antisemites which are courted for votes, not right wing ones.
(And yes, this comment is certainly enough to stamp me much worse than religious people refusing to shake hands with women.)
You'd fit right in. But the long winter dark is painful.
I am not calling you names, if so I apologize as that's not my intention. I don't see why you think my earlier comment is not a rational argument:
"but it's bigotry when you suggest asadlionpk is supportive of a culture of slavery, oppression of women and hate just for his remark that he's is doing fine with following the eternal law of God in this regard."
So to me it seemed you suggested that everybody who follows the laws of God (in this regard) is an extremist with your quote that asadlionpk "argue for a fundamentalist sharia state or similar" or you did not meant to suggest this but then you should have expressed it differently, imho. It's very difficult or impossible for me to read it otherwise.
I am not planning or thinking about moving anywhere. I meant other people do because of the misappropriation and misunderstandings about religion and culture.
The political double standards you speak of also exist here, fortunately the media at times pierces through these double standards. Perhaps you don't expect it but I respect your comment and I've no reason to stamp you or call you names because of that. I even sympathize with it. I also have no problem with people refusing to shake hands with women on religious grounds unless it's a sign of disrespect. You can respect people and not giving them a hand, just as much as you can practice non-interest banking and participate in a moderate religious way of life.
Uhm, my explicit point here is that if the muslims have some of the weird stuff they'll usually have the whole package.
To be clear -- it seems needed -- if someone isn't shaking hands with women then they will almost certainly have lots of attitudes which would make a non-moslem in Sweden almost burned today...
I have no problems with that burning, except the disgusting double standards for different people. The politically correct hypocrisy is even racist -- "those brown can't do better, don't hold them to the same standards as real people".
(A note: What the Swedish politically correct idiots I talked about lack, is a sense of history -- 150-200 years ago the state church in Sweden was as tolerant as the islamists, including most of the weird stuff. Like e.g. not tolerating peiple leaving the religion and forbidding prophylactics. This is totally forgotten now.)
* Jews were allowed to loan money to non-Jews, whom the Jewish legal system originally counted as "foreigners". (Please remember that these laws were written in a much more tribalistic and xenophobic age.)
* Laws were passed keeping Jews out of professions other than peddling and moneylending, thus ensuring a steady supply of Jewish lenders.
* If the ruling class didn't want to pay back a Jewish lender, they could just call him a Christ-killer, turn a mob against him, and run him out of town.
And then the borrower has to return back same amount of gold irrespective of its value.
Unrelated side note: If you have any more than 3-months expenses in your Savings account, take them out and put them in a NASDAQ or S&P index fund with low fund expenses.