Bank customers who overdraw their accounts are paying more in fees after Congress blocked a federal rule that would have capped those charges at $5 for the largest financial institutions. The Consumer Financial Protection Bureau finalized the overdraft rule in late December 2024, projecting it would save consumers billions of dollars annually. But a joint resolution under the Congressional Review Act, designated S.J.Res. 18 in the 119th Congress, nullified the measure before it ever took effect. With no cap in place, the country’s biggest banks face no new federal constraint on what they charge when a checking account dips below zero.
How the CRA vote removed the only pending federal overdraft cap
The CFPB published its overdraft regulation targeting very large financial institutions, defining a new framework that would have treated most overdraft charges above $5 as credit subject to Truth in Lending Act disclosures. The agency framed the action as closing a long-standing regulatory gap that let banks collect fees far exceeding the cost of covering a negative balance. In a press release accompanying the rule, the CFPB said the change would save Americans billions each year.
Congress moved quickly to undo it. According to the official action log, S.J.Res. 18 passed both chambers and was signed into law under the Congressional Review Act. The Government Accountability Office had already issued its determination, cataloged as B-337003, confirming the rule qualified for CRA procedures. Once the disapproval resolution was signed, the CFPB updated its compliance page to reflect that the rule had been nullified and would not take effect.
The practical result is straightforward: banks above the CFPB’s asset threshold can continue charging overdraft fees at whatever level they set. For households that regularly overdraw, that means the status quo of fees typically ranging well above $5 per incident remains intact, with no scheduled federal replacement. Consumers who might have seen sharply lower charges on small overdrafts instead remain exposed to fee schedules that can turn a minor miscalculation into a cascade of penalties.
Quarterly fee revenue was already climbing before the rule died
CFPB research tracking bank call-report data showed that overdraft and nonsufficient fund fee revenue had begun recovering from pandemic-era lows well before the rule was finalized. The agency’s ongoing monitoring of overdraft and NSF trends documented this rebound using quarterly filings that banks submit to federal regulators. That upward trajectory raised the financial stakes of any cap: the larger the revenue stream, the more banks stood to lose from a $5 limit and the more consumers stood to save.
Even before Congress intervened, the CFPB’s data showed that fee income, while below its pre-2020 peak, was no longer in the steep decline seen early in the pandemic. Some large institutions had voluntarily reduced or eliminated certain overdraft products under public and regulatory pressure, but the aggregate numbers suggested that remaining fees still represented a significant and growing line of business. Against that backdrop, the bureau’s effort to reclassify most overdraft charges as credit was poised to reshape pricing across the largest banks.
The hypothesis that large banks accelerated fee increases right after the CRA disapproval is plausible but not yet provable with public data. Call-report filings for the quarters following the January 2025 signing have not been fully published and analyzed at the institution level. Without that granular data, it is not possible to isolate whether specific banks raised fees in direct response to the rule’s demise or simply continued a pre-existing trend. What is clear is that, with the cap blocked, any such increases would not run afoul of the now-nullified federal standard.
What the nullified rule would have changed for consumers
The CFPB’s approach did not outlaw overdraft programs but would have sharply limited how much very large banks could charge without treating the service as a form of credit. By setting a $5 benchmark for most transactions, the rule aimed to align fees more closely with the actual costs of covering short-term negative balances. Consumers would have seen smaller charges on routine overdrafts, more standardized disclosures, and clearer comparisons with alternatives such as small-dollar loans or credit cards.
In practice, that framework could have discouraged banks from relying on overdraft as a profit center, especially for accounts that frequently slip below zero. The bureau’s own projections of billions in annual savings implied that many customers currently pay far more than $5 per incident. For low- and moderate-income households, those savings would have translated into fewer instances where a single overdraft triggers a chain of fees, deepening financial distress.
What consumers can do now that the cap is off the table
With the federal cap blocked, overdraft fees remain largely a matter of individual bank policy and existing regulations that predate the CFPB’s attempted overhaul. Consumers who want to limit exposure still have options, though none offer the broad protection a nationwide $5 limit would have provided. Customers can review account disclosures, opt out of overdraft coverage for debit card purchases, or switch to institutions that advertise low or no overdraft fees.
Budgeting tools, low-balance alerts, and linked savings accounts can also reduce the chance of an unexpected negative balance. But these strategies require time, awareness, and in some cases access to alternative accounts that not all consumers have. The CFPB’s now-nullified rule was designed to change the default terms for millions of customers at the largest banks. With that effort halted by Congress, the burden shifts back to individual households to navigate a fee environment that remains both complex and costly.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
