CFPB Announces Rule to Limit Bank Overdraft Fees

gave Consumer Financial Protection Bureau The finals were announced on Thursday. version of a Governance Limiting the ability of banks to charge overdraft fees. It says the rule would save American consumers $5 billion a year.

The regulator said banks could choose to charge $5 for overdrafts — a big drop from the average fee of about $35 per transaction — or limit the fee to an amount that would cover borrowers’ costs. is, or may charge any fee disclosing the interest rate. Debt

“For too long, the biggest banks have taken advantage of legal loopholes that have siphoned billions of dollars from Americans’ deposit accounts,” CFPB Director Rohit Chopra said in a statement. statement. “The CFPB is cracking down on these excessive frivolous fees and is demanding that major banks come clean about the interest rates on overdraft loans.”

While the overdraft fee has been waived.creative The line item for the industry, generating $280 billion in revenue since 2000 according to the CFPB, is that banks’ revenue from the service is declining. This is because creditors are involved. JP Morgan Chase And Bank of America have either reduced the fees or limited the types of transactions that trigger them, while some banks have eliminated the fees altogether.

The CFPB’s rule applies to banks and credit unions with at least $10 billion in assets.

Effort, part of the skirmish Activity The CFPB, in the waning days of the Biden administration, faces stiff opposition from U.S. banking groups that have successfully blocked other efforts by the regulator. For example, capping a rule Credit card A late fee of $8 per incident was set in federal court that was set to go into effect in May.

The CFPB said its overdraft rule would take effect on Oct. 1, 2025, though its ultimate fate is unclear.

Even before Donald Trump’s election victory last month, the fate of the overdraft rule may have been unclear thanks to industry pushback. But Trump is expected to install a new CFPB head next month who is unlikely to support Biden-era efforts to rein in banking activity.

Bank lobbying groups have argued that the overdraft rule, first Recommended As part of Biden’s fight against junk fees in January, overdrafts would reduce access to services and could send consumers to worse alternatives like payday loans.

The Consumer Bankers Association said Thursday it was “exploring all options” to push back against the rule.

This story is in progress. Please check back for updates.