Non-Interest Income

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.