Interest Income

Interest income is the opposite of interest expense. When a company keeps cash in interest-bearing accounts, holds bonds or lends money to others, it earns interest, which is recorded as income in the period it is earned.

For example, a company with 5 million in deposits earning 4% a year would record about 200,000 of interest income.

For most non-financial companies, interest income is a small, non-operating item, shown separately from revenue from their main business. It is often reported net of interest expense as "net finance costs" or "net interest".

For banks and other lenders, interest income is the core of the business. It is their main source of revenue, and the difference between interest income and interest expense, called net interest income, is a key measure of their performance.

For individuals, interest income includes interest on savings accounts and bonds. In many countries it is taxable, although some accounts or allowances let people earn a certain amount of interest tax-free.