CFPB announces rules to limit bank overdraft fees | Wilnesh News

this Consumer Financial Protection Bureau Final announced on Thursday Version one of rule Limit banks’ ability to charge overdraft fees. The rule is said to save American consumers $5 billion annually.

The regulator said banks could choose to charge $5 for overdrafts – a significant drop from the average fee of around $35 per transaction – or limit the fee to an amount that covers the lender’s costs, or charge any fee while disclosing the overdraft interest rate. cost.

“The largest banks have long exploited legal loopholes to siphon billions of dollars from Americans’ deposit accounts,” CFPB Director Rohit Chopra said in a report. statement. “The CFPB is cracking down on these exorbitant junk fees and demanding that big banks come clean about the interest rates they charge on overdraft loans.”

The effort, part of a flurry of CFPB activity in the waning days of the Biden administration, has been met with fierce opposition from U.S. banking groups that have successfully stymied other efforts by the regulator. For example, a rule that would have capped credit card late fees at $8 per incident that was set to go into effect in May has been put on hold by a federal court.

The CFPB said its overdraft rule will take effect on October 1, 2025, but its final fate is unclear.

Even before Donald Trump won the election last month, the fate of the overdraft rule would have been unclear due to industry resistance. But Trump is expected to name a new CFPB head next month, which is unlikely to support Biden-era efforts to rein in bank activity.

Bank lobbying groups argue that the overdraft rules, first proposed as part of Biden’s war on junk fees in January, would reduce access to overdraft services and could turn customers toward worse options like payday loans.

The Consumer Bankers Association said Thursday it was “exploring all options” to resist the rule.

This story is developing. Please check back for updates.