I know that NOW accounts are still restricted to individuals and non profits but does it matter for reporting purposes since now accounts and demand deposits are all lump to gather and reported as transaction accounts?

Does what matter??

Whether we have the business interest checking coded differently then the NOW accounts

They are two totally separate products under Regulation D with totally separate requirements. How can you not separate them within your systems if you choose to maintain both products.

But under reg D they are both reported as transaction accounts.

Really?? You might want to refer to your FR2900 lines A1 and A2.

You are right so they do need to be classified differently for reporting purposes. Thanks

Are banks allowed to have interest ckg for businesses other than Reg D requirements?

Since Reg Q has been repealed you can offer interest bearing checking accounts to all customers. (NOW accounts can still not be held by for-profit entities.)

I really don't understand the difference other than coding. It is a DDA earning interest.

The only remaining difference (other than ownership limitations) is that for a NOW account the bank must still reserve the right to require 7 days advance notice on withdrawals. Interest bearing checking accounts do not carry this requirement.

Prediction: when interest rates finally start trending upward so that interest is actually something bank depositors actively seek out, business customers will begin looking for ways to make their idle balances work for them. That's when banks may finally feel pressure to start offering demand deposit accounts with interest, and perhaps convert current NOW accounts into DDAs, thus eliminating this question once and for all.

Of course, 30 years ago I might have predicted that debit cards would eliminate the need for cash payments.

I think they just like to keep us confused.

So, if I may tag onto this post, the bank can offer an interest bearing business checking account, but simply by not reserving the right to require 7 days advance notice on withdrawals, the account won't be considered a NOW account, and the product can be available to profit entities? Feels like I'm reading too much into this.....

Actually, you're reading just about the right amount into it. Take a NOW account, do away with the reservation of right to require notice of withdrawal, and you have a demand deposit account without the ownership restrictions of a NOW account. Add some business account features, such as business service charges or analysis, and you have a full-fledged business DDA with interest. There are a few other tweaks, such as making sure the accounts are re-classed so they aren't reported incorrectly on Call Reports and the like.

Hallelujah! I'm putting that in my report. This is one time it will be good to reinvent the proverbial wheel.

What if we decided to remove the verbiage of the seven day notice from our Money Market account? It would then be subject to earning interest and would not exclude certain entities?

If you took the 7-day notice away from the money market account, it would no longer qualify as a savings account. It would by default become a DDA, I believe. I imagine, though, that you'd first want to figure out what sorts of interest rates you'd want to pay on the account, because you sure as there are little red apples not want to pay MMDA rates on a transaction account.

Thank you for the insight John!