Definition of Non-interest income:
Interest is the cost of borrowing money and is one form of income that banks collect. For financial institutions, such as banks, interest represents operating income, which is income from normal business operations. The core purpose of a bank's business model is to loan money, so its primary source of income is interest and its primary asset is cash. That said, banks rely heavily on non-interest income when interest rates are low. When interest rates are high, sources of non-interest income can be lowered to entice customers to choose one bank over another.
Non-interest income is bank and creditor income derived primarily from fees including deposit and transaction fees, insufficient funds (NSF) fees, annual fees, monthly account service charges, inactivity fees, check and deposit slip fees, and so on. Credit card issuers also charge penalty fees, including late fees and over-the-limit fees. Institutions charge fees that generate non-interest income as a way of increasing revenue and ensuring liquidity in the event of increased default rates.
This represents money gained by financial institutions on investment transactions.
Meaning of Non-interest income & Non-interest income Definition