(InvestigateTV) — When an account is overdrawn, consumers pay a high price.
In 2024, the Consumer Financial Protection Bureau(CFPB) finalized a rule that would have required large banks and credit unions to limit overdraft fees to $5, align them with actual costs, or treat them as loans—with the agency estimating it could have saved consumers $5 billion annually.
“At the end of the day, we hope that when people overdraw their account that they can clearly compare an overdraft loan with a credit card loan,” Former CFPB Director Rohit Chopra, said in November 2024.
But that rule has now been overturned.
The effort was led by Republican Senator Tim Scott, chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs. In a statement, Scott called the rule “misguided,” saying it would have reduced access to credit and important financial services—resulting in more unbanked Americans.
“Overturning the Biden’s CFPB’s overdraft fee structure is good for consumers,” Scott said. “When constrained by fee caps, banks reduce overdraft coverage and deposit supply, causing more return checks and a decline in account ownerships among low-income households.”
In May, President Trump signed Scott’s resolution into law.
Mike Litt with the U.S. Public Interest Research Group(PIRG) said that decision could hurt consumers.
“Without this rule, banks can keep charging $35 per overdraft several times in a single day. That adds up fast!!” Litt explained. “And it hits people who are already living paycheck to paycheck. A lot of people might not realize that they opted into overdraft coverage. And even if they had enough money in their bank account at the time of a purchase, they still might get hit with a fee if other transactions go through first.”
To avoid surprise fees, Litt recommended that consumers check if they are enrolled in overdraft coverage, so they know their debt card could be declined if their account balance drops too low.
He also suggested signing up for low balance alerts to get a text or an email when an account falls below a certain amount.
Those who think they might have been incorrectly charged an overdraft fee should file a complaint with the CFPB.