NEGOTIABLE ORDERS OF WITHDRAWAL ACCOUNTS - NOW

Negotiable Orders Of Withdrawal Account, normally called NOW account, is an interest-bearing deposit account. The funds in a NOW account may be accessed in various ways, such as by means of checks, drafts, telephonic or electronic orders or instructions to make payments or transfers to third persons or to others, and the number of withdrawals and transfers allowed under NOW accounts is unlimited. In the United States, the Glass-Steagall Act of 1933 (Section 11) provided that no member bank of the Federal Reserve System could pay any interest on checking accounts and the Banking Act of 1935 extended the prohibition also to non-member banks. Moreover, Regulation Q (Title 12, part 217 of the United States Code of Federal Regulations) imposed rate ceilings on saving accounts. Since 1972, mutual savings banks began to offer NOW accounts to compete more effectively with commercial banks in the retail sector without infringing these legal provisions. The new instruments were structured as to present all the basic features of interest – bearing checkable accounts without being for legal purposes demand accounts. Finally, Title III of the Depository Institution Deregulation and Monetary Control Act of 1980, called the Consumer Checking Account Equity Act, permitted NOW accounts nationwide at all depository institutions. If no interest is paid, the account is called a NINOW.
Editor: Bianca GIANNINI 
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