If you’re managing a business, you need a commercial checking account to access your funds securely. But what if you could utilize these benefits while also earning interest on your balance? NOW, or negotiable on withdrawal, accounts offer these combined advantages to provide a convenient and simple banking solution for businesses. To better understand this option, here are a few key points to know about these unique accounts.

How Did NOW Accounts Originate?

In response to the effects of the Great Depression, The Banking Act of 1933 was formed to prevent banks from paying interest on checking accounts that were payable upon demand. This approach was designed to discourage another run on the banks like the 1929 stock market crash.

Eventually, however, the appeal of interest-bearing checking grew. Around the mid-1970s, Congress allowed for the creation of NOW accounts as a way for banks to provide interest on payable-on-demand checking balances.

How Do NOW & Traditional Checking Accounts Differ?

When NOW accounts first came into creation, traditional checking—also known as demand deposit— accounts could not provide interest on any funds. Customers, however, could withdraw money without any advance notice.

By contrast, NOW accounts earned interest and had a technical rule that allowed banks to require up to seven days of advance notice before making a withdrawal. Most institutions don’t exercise this practice.

After the Dodd-Frank Wall Street Reform in 2011, any checking account was permitted to gain interest. However, the actual amount of interest provided on either type of account varies between institutions. As such, a bank may have a NOW option that pays higher interest than their traditional demand deposit vehicles.  

How Do NOW & Money Market Accounts Differ?

NOW and money market accounts are similar in that they make funds accessible while providing interest on balances. NOW accounts have unlimited check writing or withdrawals. Money markets, however, typically limit how many withdrawals you can make each month. Exceeding this limit may result in additional fees.

If you’re looking for smart vehicles to protect and grow your business finances, turn to Talbot State Bank. Providing commercial and personal banking services in Fayetteville, GA, this financial institution provides a wide range of high-earning, low-fee options to suit your specific goals. In addition to direct deposit, savings, and money market solutions, this provider offers business NOW accounts that offer unlimited check writing for a low minimum required balance. Visit the bank online to learn more about their commercial products and services or call (770) 692-0900 for details about current rates.