What is Non-Interest Income?
In banking, non-interest income is revenue derived mostly from fees and other activities outside the core activity of lending.
How Does Non-Interest Income Work?
For example, let's say Bank XYZ charges customers $25 for bounced checks, $4 to use an out-of-network ATM, and $3 for a paper statement. These fees are considered non-interest income.
There are literally dozens of different kinds of non-interest income. Here's a list of some of the more common types...
-- late fees
-- monthly account service charges
-- annual fees
-- service fees
-- inactivity fees
-- insufficient funds (NSF) fees
-- overdraft fees
-- over-the-limit fees
-- check fees
-- deposit slip fees
-- loan origination fees
-- loan servicing fees
-- gains and losses from the sale of loans and securities
Some banks and other financial institutions also generate significant revenues from the sale of insurance products, financial planning services, annuities and brokerage services, among other things. If a financial institution's primary source of income comes from charging its customers interest on loans, then any other fees or services it provides will typically fall into the category of non-interest income. You'll often find these items listed as non-interest revenue on the company's income statement.
Why Does Non-Interest Income Matter?
There are many forms of non-interest income, and they constitute a major component of revenue for banks, credit card companies, and many other financial institutions in the United States.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Parents, imagine this scenario: You're at home on a leisurely Saturday afternoon enjoying the peace and quiet of an empty house, when, suddenly, you receive an alert on your smart phone. It...Read More →
These days, investors want exposure to international markets. Luckily, the options to get exposure to foreign-based investments are about as plentiful as they have ever been. But sometimes...Read More →
Most investors understand the need to keep a portfolio from becoming too risky. As we saw in 2008, those investors that were fully invested in the...Read More →
Saving money? That’s amazing, but you might be wondering what’s the best account to store your savings. Below we break down your options by looking at money market accounts vs savings accounts so...Read More →