Non-Interest Income

Posted in Finance, Accounting and Economics Terms, Total Reads: 319
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Definition: Non-Interest Income

It is a type of income for banks and creditors, which they levy for their services and penalty charges, in the form of fees.


Non Interest Income are of various types and includes deposit and transaction fees, asset sales and property leasing fees, annual and monthly account service charges, insufficient funds (NSF) fees, check and deposit fees, inactivity fees. It provides institutions with a source of income, and ensures liquidity and hedges risks during times of fluctuating and increasing default rates. Non Interest Income margin is not controlled by law or any type of regulation. Moreover it remains unaffected by changes in economy and financial markets.


Eg: A small monthly fee debited from customer’s account for services like auto updates, posting of debits and credits in the account on monthly basis, providing monthly account statement to customer and providing checks free of charge.

 

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