In December 2024, the Consumer Financial Protection Bureau (CFPB) finalized a rule to update regulatory exemptions of overdraft loans from lending laws. According to the Bureau, this is a major step in the CFPB’s efforts to curb junk fees.
Per the CFPB, for decades, overdraft loans have not only added billions of dollars to consumer costs but have also caused tens of millions of consumers to lose access to banking services and be faced with negative credit reporting. Starting October 2025, the CFPB’s new rule requires financial institutions with over $10 billion in assets to either: 1) cap their overdraft fees at $5; 2) cap their fee at an amount that covers their costs and losses; or 3) comply with the requirements regulating other loans, including providing consumers a choice to open an overdraft line of credit, providing disclosures that would allow comparison shopping, and sending periodic statements. The CFPB estimates that this new rule will provide up to $5 billion in annual overdraft fee savings to consumers.
According to the CFPB’s press release, this rule marks a major step in the CFPB’s broader efforts to eliminate junk fees, which has included enforcement actions against large financial institutions as well as rulemaking. Since announcing this initiative, the CFPB has ordered many large financial institutions to refund consumers hundreds of millions of dollars in allegedly unlawful fees and ordered multiple banks to reduce or eliminate purportedly illegal overdraft fees, which has resulted in consumer redress of over $6 billion.
The post CFPB Finalizes Rule Relating to Overdraft Fees for Large Banks appeared first on Consumer Finance Insights (CFI).