What Is a Negotiable Order of Withdrawal (NOW) Account?
A Negotiable Order of Withdrawal (NOW) Account is an interest-bearing account that operates like a checking account but served up some interest to spice up your economic life where standard demand deposits did not. Before the Dodd-Frank Act came along and changed the playing field in 2010, you could scribble a draft, chuck it at your banker, and still earn a little extra on the side. It was like having your cake and eating it too—but with more paperwork.
Understanding Negotiable Order of Withdrawal Accounts
These accounts were born out of necessity and a sprinkle of defiance against the draconian rules that once forbade banks from rewarding deposit account holders with interest. Truly, the NOW account was the James Dean of banking products—rebellious, enticing, and for a while, everywhere. They provided a clever loophole around Regulation Q, which was about as popular as a rainout at a picnic, until the regulations were lifted in 2011 by the Dodd-Frank Act.
History Makes Money
Back in the thrilling banking days of 1974, Ronald Haselton, who apparently didn’t get enough excitement from typical bank offerings, invented the NOW Account in Massachusetts, giving savers an interest-earning oasis in a desert of non-rewarding accounts. This spread faster than a cat video on the internet, and soon every saver wanted in. The NOW Account provided that “little extra” until everybody realized they could just have the little extra without the NOW fuss after Dodd-Frank played fairy godmother and abolished Reg Q.
NOW Accounts vs. Demand Deposit Accounts
Think of a NOW account as a demand deposit account with a talent for earning interest. It’s like having a regular checking account but with a secret skill, like juggling or speaking Klingon. Allegedly, they’re similar but the magic of the NOW Account was in the interest—making it the checking account that ‘checked’ all the boxes until modern regulations made it pretty much the same as an ordinary checking account.
Oh, Wonderous Now! Where Art Thou?
The thrilling saga of the NOW Account reminds us that finance isn’t just about the numbers; it’s also about the story. It’s drama, it’s creativity, it’s innovation strapped with a calculator. Today, while typical NOW accounts may not hold the same sway as they once did, their spirit lives on—for better or for worse—in modern banking products that continue to evolve like the plot of a daytime soap opera.
Related Terms
- Demand Deposit Account: The plain vanilla of banking accounts. No frills, no fuss, just deposit and withdraw whenever you like.
- Regulation Q: An old banking relic that forbade interest on demand deposits. It’s like your 8-track tape player—historical but not missed.
- Dodd-Frank Act: The financial regulations overhaul that made the NOW account as necessary as a landline.
Further Reading
For those who wish to dive deeper into the riveting world of banking history and regulations:
- “The Age of Cryptocurrency” by Paul Vigna and Michael J. Casey - Explore how digital innovations are tackling old banking traditions.
- “Lords of Finance” by Liaquat Ahamed - Delve into the history that shaped modern financial policies and practices.
In the grand ledger of banking products, the NOW account may just be a footnoteright, but oh, what a stylish footnote it is!
