Republicans Seek Repeal of Overdraft Fee Cap, Impacting Consumers

Republicans in Congress are moving to repeal a Consumer Financial Protection Bureau (CFPB) rule that caps overdraft fees at $5, a substantial reduction from the typical $35 fee. Introduced by House Financial Services Committee Chairman French Hill and Senate Banking Committee Chairman Tim Scott, the legislation aims to eliminate what they describe as unnecessary regulations affecting banks' ability to manage overdrafts. Critics, including consumer advocacy groups and Democratic lawmakers, argue this move will burden low-income families and contradict Republican promises to lower costs for Americans, potentially costing households an average of $225 annually. The rule, which is projected to save consumers $5 billion per year, was set to take effect in October but is now under threat as the GOP seeks to support banking interests. Acting CFPB Director Russ Vought expressed gratitude for the legislation, underscoring its alignment with the Trump administration's deregulatory agenda. Major banking associations have rallied behind the repeal, citing the rule as a hindrance to their operations.