Legal Definitions - negotiable order of withdrawal

A negotiable order of withdrawal (NOW) is a type of financial instrument that allows the holder to withdraw funds from a bank accounton demand. It is similar to a check, but it is issued against funds that have already been deposited with a financial institution.

For example, let's say that John has a NOW account with his bank. He has deposited $1,000 into the account, and he can write a NOW check for up to that amount. If he writes a check for $500 and gives it to his landlord, the landlord can take the check to the bank and cash it immediately. The bank will then deduct $500 from John's account.

Another example is if Sarah has a NOW account with her credit union. She has deposited $2,000 into the account, and she can write a NOW check for up to that amount. If she writes a check for $1,000 and gives it to her contractor, the contractor can take the check to the credit union and cash it immediately. The credit union will then deduct $1,000 from Sarah's account.

These examples illustrate how a negotiable order of withdrawal works. The holder of the NOW account can write a check for a certain amount, and the recipient can cash it immediately. The funds are deducted from the account, and the holder can continue to use the remaining balance as needed.