A NOW account is a checking account that pays interest on your balance
A NOW account (Negotiable Order of Withdrawal) is a bank deposit account that combines features of both a savings account and a checking account. You can write checks or use a debit card to withdraw money whenever you want, but unlike a regular checking account, the bank pays you interest on the money you keep in it. The interest rate is typically low—often less than 1 percent per year—but it is real money the bank adds to your account.
NOW accounts were created in the 1970s as a way around old banking rules that banned banks from paying interest on checking accounts. Today those rules are gone, but NOW accounts still exist and some people use them. They are most common at credit unions and smaller regional banks, though some larger banks offer them too.
Key Takeaways
- A NOW account lets you write checks and use a debit card while earning interest on your balance, unlike a standard checking account.
- Interest rates on NOW accounts are typically very low, usually under 1 percent annually, so the money you earn is modest.
- NOW accounts often come with monthly fees, minimum balance requirements, or limits on how many checks you can write each month.
- For most people, a regular checking account or high-yield savings account will serve you better depending on whether you need to write checks or maximize interest.
How NOW accounts differ from regular checking accounts
The main difference is interest. A regular checking account pays you nothing on your balance—the bank keeps all the money you deposit and uses it to make loans or invest. A NOW account pays you a small amount of interest each month, calculated on your average daily balance or your lowest balance during the month (the method varies by bank).
The tradeoff is that NOW accounts often come with costs or restrictions that regular checking accounts do not. Many require a minimum balance—sometimes $500, sometimes $2,500 or more—and charge a monthly fee if you fall below it. Some limit the number of checks you can write per month or the number of debit card transactions you can make. A few still charge per check or per transaction, though this is less common now.
Because of these restrictions and the very low interest rates, most people find that a NOW account is not worth the hassle. If you want to earn interest, a high-yield savings account at an online bank typically pays 4 to 5 percent annually—far more than a NOW account. If you just want a checking account with no fees, a basic checking account at most banks or credit unions costs nothing and has no minimum balance.
When a NOW account might make sense
NOW accounts are most useful if you have a specific situation: you keep a large balance in your checking account and want to earn something on it, and you do not want to move money between accounts. If you regularly carry $10,000 or more in checking and your bank offers a NOW account with no monthly fee and a low minimum, you might earn $40 to $60 per year in interest—not much, but better than zero.
Some credit unions offer NOW accounts with no monthly fee and no minimum balance, which makes them more competitive. If your credit union has one of these, it costs nothing to open and you lose nothing by having it instead of a regular checking account. You get the same checking features plus a small interest payment.
Older adults or people who prefer to bank in person sometimes choose NOW accounts at local banks or credit unions because they like the relationship and the interest payment feels like a small reward for their loyalty. This is a valid reason, even if the math does not favor it.
Interest rates and how they are calculated
NOW account interest rates vary widely by bank and change over time. As of 2024, most banks pay between 0.01 and 0.50 percent annually on NOW accounts. Some credit unions pay slightly higher rates, up to 1 percent or occasionally more, but these are exceptions.
The bank calculates interest based on your balance using one of two methods. The average daily balance method adds up your balance at the end of each day, divides by the number of days in the month, and pays interest on that average. The lowest balance method pays interest only on the smallest amount you held during the month. The lowest balance method pays you less, so ask your bank which one they use before you open an account.
Interest is usually deposited into your account monthly, though some banks do it quarterly. You can see the exact amount on your monthly statement.
Fees and minimum balance requirements
NOW account fees vary by bank. Some charge nothing; others charge $5 to $15 per month. Many waive the fee if you maintain a minimum balance, which might be $500, $1,000, $2,500, or higher depending on the bank. A few charge per check or per debit card transaction, though this is rare.
Before opening a NOW account, read the fee schedule carefully. Ask the bank directly: What is the monthly fee? What is the minimum balance? What happens if you fall below it? Do they charge per check or per transaction? Some banks list these details online; others require you to ask or read the account agreement.
If a bank charges a $10 monthly fee and you earn $2 per month in interest, you are losing $8 per month. Make sure the interest you earn covers the fees, or choose a different account type.
NOW accounts versus other account types
The choice between a NOW account and other accounts depends on what you need. If you want to write checks and earn interest, a NOW account works, but the interest is so low that you might not care. If you want to maximize interest, a high-yield savings account pays much more but does not come with a debit card or checkbook—you transfer money out when you need it. If you want a checking account with no fees and no minimum, a basic checking account is simpler and costs nothing.
Some people keep both: a NOW account or regular checking account for daily spending and bill payments, and a high-yield savings account for money they want to save. This way you earn real interest on savings while keeping a checking account for convenience.
| Account Type | Write Checks | Debit Card | Interest Rate | Monthly Fee |
|---|---|---|---|---|
| NOW Account | Yes | Usually | 0.01–0.50% | Often $5–$15, sometimes none |
| Regular Checking | Yes | Yes | 0% | Often none |
| High-Yield Savings | No | No | 4–5% | Usually none |
| Money Market Account | Limited | Sometimes | 4–5% | Often none |
How to open a NOW account
Opening a NOW account is the same process as opening any checking account. You visit a bank or credit union in person or online, provide your name, address, Social Security number, and government-issued ID, and sign the account agreement. The bank runs a background check (usually through ChexSystems, a banking history database) and either approves or denies you on the spot.
Most banks and credit unions let you open an account online in 10 to 15 minutes. You will need to fund the account with an initial deposit, usually at least $25 to $100. Some banks mail you checks and a debit card; others let you order them online. You can start using the account as soon as the bank confirms it is open.
If you are switching from another bank, ask whether the new bank offers a NOW account. Not all do. If your current bank does not have one and you want one, you will need to open an account at a different bank or credit union.
Frequently Asked Questions
Can I withdraw money from a NOW account anytime I want?
Yes. A NOW account is a checking account, so you can withdraw money by writing a check, using your debit card, or visiting a branch. There are no restrictions on how often you withdraw, though some banks limit the number of checks per month or charge a fee if you exceed it. Check your account agreement for any limits.
Do NOW accounts have FDIC insurance?
Yes, if the bank is FDIC-insured. Your deposits are insured up to $250,000 per account type per bank. A NOW account is insured separately from a savings account at the same bank, so if you have both, each is covered up to $250,000. Credit union accounts are insured by the NCUA, which works the same way.
Is a NOW account the same as a money market account?
No. A money market account is a savings account that pays higher interest (currently 4 to 5 percent) but usually limits how many times you can withdraw per month. A NOW account is a checking account that pays very low interest but lets you withdraw anytime. Money market accounts typically pay more, but NOW accounts are more convenient for frequent spending.
What happens to my interest if I close the account?
The interest you have already earned stays in your account until you close it. When you close, the bank pays you the full balance including all interest earned. If you close mid-month, you may not earn interest for that partial month, depending on the bank's policy.
Can I have multiple NOW accounts at the same bank?
Yes, you can open more than one NOW account at the same bank if you want. Each account is insured separately up to $250,000. Some people open one for household expenses and another for a specific purpose, though this is uncommon. Ask your bank if there are any limits on the number of accounts you can hold.