Negotiable Order of Withdrawal account

Negotiable Order Of Withdrawal Account

Negotiable Order of Withdrawal account

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Description:
In the United States, a Negotiable Order of Withdrawal account (NOW account) is a deposit account that pays interest, on which checks may be written. The terminology is because "Negotiable Order of Withdrawal" is a legal name for a check, or rather a statutorily distinct (but in practice identical) negotiable instrument.

NOW accounts are structured to comply with Regulation Q, which prohibits interest on checking accounts: NOW accounts are interest-bearing, and checks may be written on them, but legally the accounts are not interest-bearing checking accounts.

History

NOW accounts are considered checkable deposits, and are counted in the Fed's M1 definition of the money supply. As such, they are considered liabilities from the bank's perspective.

The NOW account was developed and put into effect by Ronald Haselton, former President and CEO of the Consumer Savings Bank in Worcester, MA.

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