A NOW account is a checking account with interest, but it comes with restrictions that regular checking accounts don't have

A NOW account (Negotiable Order of Withdrawal) is a hybrid between a savings account and a checking account. It lets you write checks and use a debit card like a regular checking account, but it pays you interest on your balance—something most checking accounts don't do. The catch: federal law limits how often you can withdraw money, and banks can require advance notice before you withdraw large amounts.

NOW accounts were created in the 1970s as a way around old banking rules that banned interest on checking accounts. Those rules have mostly changed, but NOW accounts still exist and still carry those withdrawal restrictions. Today, they're less common than they used to be, but some banks and credit unions still offer them, usually to customers who want interest but don't need frequent access to their money.

Key Takeaways

  • A NOW account functions like a checking account because you can write checks and use a debit card, but it pays interest like a savings account.
  • Federal law limits NOW accounts to six withdrawals per month, and banks can require written notice before you withdraw large sums.
  • Most people use regular checking accounts instead because they offer unlimited withdrawals and many now pay interest too.
  • If you find a NOW account, compare its interest rate and fees against a regular checking account and a money market account at the same bank.

How NOW accounts differ from regular checking accounts

The main difference is the withdrawal limit. A regular checking account lets you withdraw money as many times as you want—unlimited debit card swipes, unlimited ATM visits, unlimited checks. A NOW account is capped at six withdrawals per month by federal regulation. That includes debit card transactions, ATM withdrawals, and checks written. In-person withdrawals at a teller window usually don't count toward the limit, but that varies by bank.

The second difference is notice. Banks can require you to give written notice—usually 7 to 30 days—before you withdraw a large amount from a NOW account. A regular checking account has no such requirement. You can walk in and withdraw $5,000 in cash on the spot.

The third difference is interest. Most regular checking accounts pay zero interest or a fraction of a percent. NOW accounts are designed to pay interest, though the rate varies by bank and market conditions. In 2024, some NOW accounts pay 4% to 5%, but you need to shop around—rates change frequently and differ widely.

When a NOW account might make sense for you

A NOW account works best if you have money you want to keep accessible but don't touch often. If you write fewer than six checks a month and rarely use your debit card, the withdrawal limit won't affect you. You get interest without moving money to a separate savings account.

They can also work if you're trying to keep an emergency fund separate from your everyday spending account. Because the withdrawal limit discourages frequent access, it can help you avoid dipping into the money for non-emergencies. The interest rate sweetens the deal.

However, if you write more than six checks a month, use your debit card regularly, or need to withdraw cash frequently, a NOW account will frustrate you. You'll hit the limit and either have to wait until the next month or pay a fee for excess withdrawals—usually $25 to $35 per transaction over the limit.

NOW accounts versus money market accounts

A money market account is similar to a NOW account in structure: it pays interest and limits withdrawals to six per month. The difference is subtle but real. Money market accounts typically offer higher interest rates than NOW accounts, but they also usually require a higher minimum balance to open and maintain. Some money market accounts charge monthly fees if your balance drops below $2,500 or $5,000.

NOW accounts tend to have lower minimum balances and lower or no monthly fees. If you have a small balance and want to avoid fees, a NOW account may cost you less. If you have a larger balance and want the highest interest rate, a money market account might pay more in the long run.

Both are subject to the same six-withdrawal limit. Neither is a good fit if you need frequent access to your money.

How to find a NOW account today

NOW accounts are less common than they used to be because regular checking accounts now offer better features and sometimes interest too. However, some banks and most credit unions still offer them. Call your current bank or credit union and ask if they have NOW accounts. If they do, ask for the current interest rate, any monthly fees, the minimum balance required, and what counts toward the six-withdrawal limit.

Compare that offer against their regular checking account (especially if it pays interest) and their money market account. Use an online calculator to estimate how much interest you'd earn over a year at each rate, then subtract any monthly fees. The difference might be small—sometimes just a few dollars per year—so factor in convenience too. If you'd rather have unlimited withdrawals and pay a small price in interest, a regular checking account might be worth it.

Online banks rarely offer NOW accounts because they don't have physical branches and don't need to attract deposits the way traditional banks do. If you're shopping online, look for high-yield savings accounts instead—they pay better interest and have no withdrawal limits (though federal law caps transfers to six per month, most banks don't enforce it for online transfers).

What happens if you exceed the withdrawal limit

If you go over six withdrawals in a month, the bank will charge you a fee for each excess withdrawal. That fee is usually $25 to $35. Some banks will also convert your account to a regular checking account if you repeatedly exceed the limit, which means you lose the interest rate.

A few banks will simply deny the withdrawal if you've hit your limit. You'll get a declined message at the ATM or at checkout, and you won't be able to access the money until the next month begins. This is rare but possible, so don't rely on a NOW account for emergency cash access.

Frequently Asked Questions

Can I write unlimited checks on a NOW account?

No. Each check counts as one withdrawal toward the six-per-month limit. If you write seven checks in a month, the seventh one will trigger a fee or be declined, depending on your bank's policy. If you write many checks, a NOW account isn't the right product for you.

Do in-person ATM withdrawals count toward the limit?

Usually yes, but it depends on your bank. Most banks count ATM withdrawals the same as debit card transactions. Some banks exempt withdrawals at their own ATMs but count withdrawals at other banks' ATMs. Ask your bank specifically before opening a NOW account.

What's the interest rate on a NOW account right now?

Rates vary by bank and change frequently. In 2024, some NOW accounts pay 4% to 5%, but others pay less than 1%. Call your bank directly or check their website for the current rate. Don't assume the rate advertised online is still active—banks change rates often.

Can I use a NOW account as my main checking account?

You can, but only if you write fewer than six checks a month and rarely use your debit card. If you're an active spender or writer of checks, you'll exceed the limit and pay fees. Most people use a regular checking account for daily spending and keep a NOW account or savings account separate for money they want to save.

Is a NOW account FDIC insured?

Yes, if your bank is FDIC insured. NOW accounts are covered up to $250,000 per depositor per bank, the same as regular checking accounts. Credit union NOW accounts are covered by NCUA insurance up to the same limit. Check your bank's or credit union's website to confirm they carry deposit insurance.