The Bank Slate


CFPB proposes new system for determining overdraft fees

The Consumer Financial Protection Bureau has proposed a rule that would limit overdraft charges at large U.S. banks and credit unions.

The proposal, which must go through a comment period, would replace the traditional $35 overdraft fee with a set of options for setting a lower fee. Banks could charge a breakeven fee based on each bank’s costs or a benchmark fee determined by the CFPB.

The bureau proposed a range of $3 to $14 for the benchmark.

Banks could also treat overdrafts as a credit line with disclosures mandated by the Truth in Lending Act.

The CFPB said the proposed changes, which would not take effect until late 2025, could save households up to $3.5 billion a year in fees.

“Decades ago, overdraft loans got special treatment to make it easier for banks to cover paper checks that were often sent through the mail,” CFPB Director Rohit Chopra said in a press release.

“Today, we are proposing rules to close a longstanding loophole that allowed many large banks to transform overdraft into a massive junk fee harvesting machine,” he added.

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