CFPB Caps Overdraft Fees Amid Regulatory Push

The Consumer Financial Protection Bureau (CFPB) has finalized a rule capping overdraft fees at $5 for major banks and credit unions, aiming to save customers up to $5 billion annually. This rule, effective October 1, 2025, targets banks with over $10 billion in assets, significantly reducing fees from the current average of $30 to $35 per transaction. Despite its potential savings, large banks and Republican lawmakers have criticized the regulation as governmental overreach. The CFPB's move aligns with a broader initiative by the Biden administration to eliminate so-called junk fees, although the rule's future is uncertain with potential legal challenges and a possible rollback under a Trump administration. Some banks, including Bank of America, Citi, and Capital One, have already voluntarily reduced or eliminated such fees. The American Bankers Association and other industry groups warn that the rule might deter banks from offering overdraft services, affecting consumers needing emergency funds.