Differentiate interest income from non-interest income.

Interest income refers to the revenue earned through investments such as bonds, stocks and other securities. These types of investments generate a return based on an agreed upon rate of interest which can be paid either periodically (such as in the form of dividends) or when the investment matures.

Noninterest income refers to profits derived from sources such as sales, fees, royalties and rent rather than from investing in financial markets. This type of income is considered more reliable because it does not depend on market fluctuations but instead comes from providing services or goods that customers need or want. Additionally, noninterest income often tends to be taxed lower than its counterpart due to being considered “ordinary” rather than “capital gains” earnings.