Congress repeal drives bank overdraft fee revenue higher

Households stretched between paychecks are again paying more when bank accounts go negative, as banks rebuild a fee stream that reached $6.1 billion in overdraft revenue in 2024 and climbed above $12 billion in combined overdraft and nonsufficient-funds fees in 2025. Congress blocked a Consumer Financial Protection Bureau cap that would have cut those charges for customers at banks and credit unions with more than $10 billion in assets, leaving the old fee structure in place.

The CFPB finalized the rule on December 12, 2024. It would have capped overdraft fees at $5 or required lenders to tie them to actual costs and losses, and the bureau said the change could have saved consumers up to $5 billion a year, or about $225 for each household that pays overdraft fees. The rule was set to take effect on October 1, 2025, but Congress disapproved it in 2025 and President Trump signed the repeal on May 12, 2025.

The Federal Reserve created an overdraft exemption in 1969, when paper checks were common and clearing delays were slow. Today, overdraft and NSF charges remain a major profit source, and the largest banks and credit unions account for more than two-thirds of marketwide overdraft fee revenue, the CFPB said.

Revenue comes directly out of households under strain, turning small shortfalls into repeated charges that can snowball into account problems. Overdraft practices can contribute to account closures and reduce access to banking services. Banking groups said the rule would have reduced access to overdraft protection and stripped consumers of a form of short-term financial flexibility.