Many Individuals celebrated final 12 months when authorities officers introduced a restriction on $35 financial institution overdraft charges for checking accounts. However with the change in management in D.C., it is now unclear whether or not this may occur.
President Donald Trump and Tesla CEO Elon Musk wish to dramatically scale back — if not kill — the regulatory authority of the Shopper Monetary Safety Bureau, the 14-year-old company behind the rule limiting overdraft charges. This might imply that top overdraft charges, which could be a vital monetary burden for people tight on funds, are right here to remain in spite of everything.
Some banks, like Citi and Capital One, have totally eradicated overdraft charges and advised Cash they’re dedicated to their insurance policies — it doesn’t matter what occurs on the federal degree.
Nonetheless, different main banks have but to supply the identical aid to clients. Banks together with JPMorgan Chase, Wells Fargo, U.S. Financial institution and PNC nonetheless cost overdraft charges of $34 to $36, accumulating a whole bunch of hundreds of thousands per 12 months off them. These banks are probably hoping that the Trump administration and the GOP-controlled Congress can reverse the Biden-era rules.
Trump admin appears to undo ‘midnight’ rule on overdraft charges
In December, the CFPB introduced a last rule that might finish “extreme” overdraft charges efficient Oct. 1, 2025, capping the fees — which usually run round $35 — at $5. Alternatively, banks may cost an overdraft quantity simply excessive sufficient to cowl their prices or losses. Or they may provide overdraft loans (if the phrases and rates of interest for these credit score strains have been disclosed).
Whereas many customers have been enthusiastic about this modification, the regulation is now in jeopardy. An effort in Congress spearheaded by Rep. French Hill, R-Ark., and Sen. Tim Scott, R-S.C., goals to repeal the CFPB rule earlier than it takes impact this fall.
In the meantime, the banking trade hasn’t given up combating it in court docket.
A spokesperson for the Shopper Bankers Affiliation, a bunch that represents retail banks, tells Cash that the rule “is an unlawful and dangerous overreach that threatens hundreds of thousands of Individuals’ entry to liquidity.” Banks additionally argue that overdraft charges help their skill to let clients pay for some transactions with adverse balances, which will help individuals entry requirements like meals and utilities — simply at a really excessive price.
What the CFPB shakeup means for overdraft charges
CFPB Interim Director Russell Vought mentioned in a publish on X that he’s “grateful” for the laws aimed toward rolling again the Biden administration’s “midnight rule” limiting overdraft charges, including that the repeal try aligns with Trump’s “deregulatory agenda.”
Earlier this month, the president picked Vought to guide the bureau after firing Rohit Chopra, the company’s director below former President Joe Biden. Chopra’s CFPB had estimated the overdraft rule would save Individuals a collective $5 billion per 12 months.
The Trump administration seems to be nonetheless figuring out precisely what it needs to do with the CFPB — an company that figures together with Musk have indicated they wish to “delete.” Musk’s Division of Authorities Effectivity, or DOGE, has already fired dozens of CFPB staffers.
However because the Trump administration eases again on financial institution regulation and halts CFPB exercise, client advocates say financial institution clients are those who will undergo.
Lauren Saunders, affiliate director of the Nationwide Shopper Regulation Middle, argued in a Feb. 13 information launch that “Republican management is siding with Wells Fargo and different huge banks over working households harm by abusive overdraft payment practices.” (The NCLC is a part of a bunch that has filed a lawsuit making an attempt to cease the Trump administration’s efforts to “dismantle” the CFPB.)
Proper now, the destiny of the rule continues to be up within the air, and there is additionally uncertainty round what would occur to overdraft charges if it have been to enter impact. However whereas the scenario unfolds, here is what seven banks are saying about their insurance policies:
Wells Fargo
- Overdraft payment: $35
- Overdraft payment income: $937 million
In 2022, the CFPB took motion towards Wells Fargo over sure overdraft expenses, ordering the financial institution to pay $205 million in redress. The financial institution nonetheless took $937 million in overdraft/non-sufficient funds payment income in 2023, based on an April CFPB report. When contacted by Cash, a spokesperson for the financial institution mentioned they didn’t want to touch upon future plans for overdraft charges.
JPMorgan Chase
- Overdraft payment: $34
- Overdraft payment income: $1.1 billion
Chase clients might be charged a $34 payment if their account is overdrawn by greater than $50. The financial institution didn’t reply to Cash’s request for remark about any doable plans to decrease that payment.
Financial institution of America
- Overdraft payment: $10
- Overdraft payment income: $140 million
Financial institution of America diminished its overdraft payment from $35 to $10 in 2022 and in addition eradicated its non-sufficient funds payment, which utilized when sure transactions have been denied. A spokesperson for the financial institution declined to touch upon future plans.
U.S. Financial institution
- Overdraft payment: $36
- Overdraft payment income: $214 million
The overdraft payment charged by U.S. Financial institution is among the many highest. The financial institution didn’t reply to Cash’s request for remark about any doable plans to alter that payment.
Citi
- Overdraft payment: None
- Overdraft payment income: N/A
Citi turned the biggest main financial institution to take away overdraft charges in 2022. “The current overdraft payment rule had no bearing on our resolution a technique or one other,” spokesperson Colin Wright tells Cash.
PNC
- Overdraft payment: $36
- Overdraft payment income: $258 million
PNC expenses a excessive overdraft payment however touts that clients can solely be charged as soon as a day. PNC didn’t reply to Cash’s request for remark about any doable plans to alter the payment.
Capital One
- Overdraft payment: None
- Overdraft payment income: N/A
A spokesperson tells Cash that Capital One “proactively” determined to completely get rid of overdraft and non-sufficient funds charges in 2021.
“We is not going to be making any adjustments to our coverage no matter how the hassle to roll-back the overdraft rule unfolds. No-Charge Overdraft has been a centerpiece of our mission to supply best-in-class, no payment and no minimal services to our hundreds of thousands of shoppers,” the spokesperson provides.
Extra from Cash:
Greatest Banks and Credit score Unions in New York for 2025
Greenback Scholar Asks: Ought to I Share a Financial institution Account With My Greatest Pal?
Reply These 6 Inquiries to Discover the Proper Debt Payoff Plan
