Published: April 2024

CFPB rule would curb abusive overdraft fees

Nearly 150 groups signed on to a letter expressing strong support for the Consumer Financial Protection Bureau’s proposed rule governing overdraft fees charged by the largest financial institutions.

Consumer Action was one of 144 organizations signed on to a letter expressing strong support for the Consumer Financial Protection Bureau’s (CFPB) proposed rule governing overdraft fees charged by large banks. The proposed rule would prevent big banks from charging excessive overdraft fees—typically $35—that are far higher than the cost to the financial institution to cover the overdraft. These fees, which serve as a bank profit center, can quickly snowball and drive consumers into debt and out of the banking system. The proposed rule would require banks to limit overdraft fees to a modest amount that covers the financial institution’s costs or, if the bank charges higher-priced overdraft credit, to comply with the same protections required of credit cards (such as transparent APR disclosures and assessment of the consumer’s ability to repay). The proposed rule would apply to the biggest banks, but advocates urged the CFPB to issue a subsequent rulemaking to cover smaller financial institutions and to stop big tech companies that offer banking apps from evading overdraft fee rules.

Lead Organization

National Consumer Law Center; Americans for Financial Reform

More Information

Read the letter here. 

Download PDF

No Download Available