Banking Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

Non-interest income refers to all the earnings a bank generates that do not come from interest on loans or investments. Common components of non-interest income include fees and service charges associated with various banking products.

In this context, monthly fee income on checking accounts, trust income, and insufficient funds service charges all represent forms of fees that do not rely on interest-bearing products. These are typical sources of non-interest income for banks, as they result from specific services provided to customers.

Late fees on loans, however, are considered interest income because they are directly related to the terms of the loan agreement. They are charged when borrowers fail to make their payments on time, thereby reflecting a cost incurred due to the borrowing of money. As such, late fees are associated with the interest-bearing activities of the bank and do not fall under non-interest income. This distinction is key to understanding the classification of income types within banking practices.