Negotiable Order of Withdrawal (NOW)
Candlefocus EditorA NOW Account works like a checking account: the account holder can access their funds by writing a check, ordering substitute checks, or using an ATM/debit card. In addition to the convenience of access, NOW Accounts allow the account holder to earn interest on their funds. This makes them a great option for those looking to maximize the return on their liquid cash reserves.
Although traditionally an individual account, with certain restrictions in place, businesses were also allowed to open NOW Accounts in certain circumstances. Some financial institutions also allowed joint accounts and even non-interest-bearing accounts if desired.
Prior to the enactment of the Dodd-Frank Act, interest payments on NOW Accounts were subject to Regulation Q, which imposed restrictions on the interest rate that could be offered by banks. The Act repealed Regulation Q, making it easier for banks to offer competitive interest rates on NOW Accounts. It also led to an increase in the number of financial institutions offering NOW Accounts as they were no longer subject to the same limitations.
Overall, NOW Accounts are a great option for those looking to earn a competitive rate on liquid funds. The convenience of access combined with the safety of FDIC-insured deposits makes NOW Accounts a desirable option for both individuals and businesses alike. The repeal of Regulation Q has made NOW Accounts an even better choice for those seeking a high rate of return on their savings.