Bank Overdraft Protection: How New CFPB Rules Could Save You $225 Per Year (Or End the Service Entirely)

That rule, however, never took effect. In May 2025, Donald Trump signed a Congressional Review Act resolution passed by Congress that nullified the regulation before implementation, leaving existing overdraft practices intact. As a result, banks and credit unions remain free to charge overdraft fees that often exceed $30 per transaction. The swift reversal underscores a continuing national debate over whether overdraft programs function primarily as a necessary short-term safety net or as a long-standing profit center built on consumer financial distress.

The regulation sought to overturn a longstanding regulatory interpretation dating back to the late 1960s that excluded overdraft fees from being treated as finance charges under federal lending law. CFPB Director Rohit Chopra argued that this interpretation had become outdated as overdraft programs evolved into a major source of fee revenue. The agency estimated that the rule could save consumers up to $5 billion annually, with most benefits accruing to a small segment of customers, roughly 9% of account holders, who generate close to 80% of all overdraft fees by overdrawing their accounts more than ten times per year.

Financial institutions strongly opposed the proposal. Banking trade groups argued that the CFPB had exceeded its statutory authority and that overdraft services do not constitute credit under existing law. They warned that imposing strict fee caps or reclassifying overdraft coverage as credit could lead banks to curtail or eliminate overdraft programs altogether, potentially pushing some consumers toward higher-cost alternatives such as payday lending.

The Senate approved the resolution in March 2025 by a 52–48 vote, followed by passage in the House in April by a 217–211 margin. Donald Trump signed the measure into law in May 2025, effectively nullifying the rule before it could take effect.

Under the Congressional Review Act, the Consumer Financial Protection Bureau is now prohibited from issuing a “substantially similar” overdraft rule in the future without explicit authorization from Congress.

Even after that drop, overdraft fees remain a meaningful revenue source. In 2023, JPMorgan Chase reported just over $1 billion in overdraft revenue, followed closely by Wells Fargo at just under $1 billion, according to public disclosures and analysis from the National Consumer Law Center. Navy Federal Credit Union generated roughly $330–340 million, despite serving fewer members than the largest banks, resulting in higher overdraft revenue per account than many national institutions.

The average overdraft fee now ranges from about $27 to $35, down from pre-2020 levels. Many banks have reduced fees, eliminated NSF charges, or introduced grace periods and low-balance thresholds. A small number, including Capital One and Citibank, have eliminated overdraft fees entirely, though these remain exceptions rather than the industry norm.

The reforms vary widely. Some banks cap the number of overdraft fees charged per day, others require a minimum negative balance before a fee is triggered, and many now provide low-balance alerts or grace periods that allow customers to avoid fees if the account is quickly restored to a positive balance. Together, these changes have contributed to a meaningful reduction in consumer overdraft costs without eliminating overdraft services altogether.

For consumers who rely on overdraft protection as an occasional safety net, the service remains available at most institutions. However, the repeal of the CFPB’s proposed overdraft rule means these fees will continue to be determined by market competition and individual bank policies rather than federal caps. Whether this represents a preservation of consumer choice or a missed opportunity for regulatory protection depends largely on perspective, and on how frequently overdraft fees are incurred.

With the federal rule off the table, consumers need to be more strategic about overdraft protection. The first step is understanding your bank’s current fee structure and the alternatives it offers. Many institutions now provide options such as overdraft lines of credit, account linking to savings accounts, grace periods, or low-balance alerts that can reduce or eliminate traditional overdraft fees.

It’s also worth evaluating whether you need overdraft coverage at all. Under federal regulations, banks must obtain affirmative consent before charging overdraft fees on ATM withdrawals and one-time debit card transactions. Consumers can opt out of this coverage without closing their accounts, though checks, ACH payments, and recurring debit transactions may still trigger overdraft fees if they exceed the available balance.

For customers who frequently overdraw their accounts, comparison shopping has become increasingly worthwhile. Online banks and many credit unions tend to offer lower fees, fee-free overdraft cushions, or no overdraft fees at all. While the market has not eliminated overdraft costs uniformly, competitive pressure has expanded consumer choice significantly compared with a decade ago, creating alternatives that may persist regardless of future regulatory action.

This topic is part of the broader banking system. For a complete explanation of accounts, transfers, fees, and consumer protections, see our Banking & Cash Management guide.