The federal government’s plan to change overdraft pricing never took effect. Congress overturned the rule before its October 2025 start date, leaving banks to operate under the earlier framework. The most reliable official revenue figure is also lower and older than some current claims: reporting banks collected $5.8 billion in overdraft and insufficient-funds fees in 2023, according to the Consumer Financial Protection Bureau.
The rejected rule offered three paths, not only a $5 fee
The CFPB finalized a rule in December 2024 for banks and credit unions with more than $10 billion in assets. Congressional Research Service’s updated account of the repeal says covered institutions would have been able to charge $5, charge another amount justified by costs and losses, or treat overdraft as credit with Truth in Lending Act disclosures.
The rule was scheduled to begin in October 2025. Congress used the Congressional Review Act to pass S.J.Res. 18, and the president signed it as Public Law 119-10 on May 9, 2025. The disapproval prevents the CFPB from issuing another rule in substantially the same form without new congressional authorization.
Calling the proposal only a $5 cap omits those alternatives, but $5 was the rule’s central safe-harbor amount. Calling it current policy would be a larger error: the rule was overturned before implementation, so account agreements and bank practices still determine the charge.
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The documented fee total is $5.8 billion for 2023
The CFPB’s bank-revenue data spotlight reported $5.8 billion in overdraft and NSF revenue for 2023. The agency said that was down more than half from 2019 as many institutions reduced fees, added grace periods or eliminated NSF charges.
The figure covers reporting banks and combines overdraft with insufficient-funds fees. It is not proof that banks collected more than $12 billion in 2026, nor does the repeal itself demonstrate that revenue returned to an older peak. A current national total requires current institution data rather than extrapolation from a policy reversal.
CRS noted that overdraft and NSF revenue declined from 2020 through 2023 even as other fee revenue remained flat. That history matters because bank policy changed before the federal rule. Some institutions now charge less, waive small shortfalls or give time to restore the account, while others retain fees near traditional levels.
The direction of the national trend does not predict one customer’s cost. An account with a lower stated fee may permit several charges in a day, while another may cap daily fees or decline transactions after one overdraft. Comparing the full schedule requires frequency limits and grace terms as well as the amount of one charge.
NSF policy deserves its own line in that comparison. A rejected payment can lead to a bank charge, a merchant return fee and a late-payment penalty from the biller. Some banks eliminated NSF fees while retaining overdraft charges, so combining the categories can obscure the event most likely to affect a particular household.
A household can manage the fee under rules that remain
Overdraft occurs when a bank pays a transaction despite an insufficient balance. An NSF event generally means the institution rejects an item for lack of funds. The cost and sequence depend on the account agreement, transaction type and bank policy.
Account alerts can create time to cover a shortfall before a transaction posts. A linked savings account or line of credit may cost less than repeated flat fees, but transfer charges and interest still belong in the comparison. Declining debit-card overdraft can prevent some point-of-sale transactions from generating a fee, although it does not control every check or recurring payment.
Transaction order also matters. A displayed balance can differ from the amount available after holds, pending debit purchases and scheduled withdrawals. Recording the bank’s cutoff times and balance method is more protective than assuming a deposit and payment will post in the order initiated.
Automatic payments can turn a small timing gap into several events. Moving due dates closer to pension or Social Security deposits may reduce exposure without relying on overdraft. Billers sometimes permit a due-date change, though the first transition month should be confirmed in writing.
A fee reversal can be requested when an isolated mistake occurs, but courtesy refunds are discretionary. The stronger long-term measure is identifying the transaction pattern that caused the shortfall and choosing an account whose stated rules fit that pattern.
The repeal leaves a concentrated burden
CFPB data cited by CRS found that roughly 9% of accounts generated 79% of overdraft and NSF fees. Those customers overdrafted more than 10 times a year. A flat charge can therefore become a recurring drain on households already operating with little cash margin.
The failed rule’s policy debate centered on whether limits would protect frequent users or reduce access to checking and short-term liquidity. Congress resolved the rule’s legal future through repeal, but it did not eliminate the household tradeoff.
The accurate numbers provide a better starting point: $5.8 billion in reported 2023 fees, a rule projected to save as much as $5 billion annually, and a repeal completed before implementation. The practical response is account-specific—read the current fee schedule, activate balance alerts and compare lower-cost overdraft settings before the next timing error turns into a chain of charges.
This article was created with AI assistance and was reviewed, edited, and fact-checked by The Financial Wire editorial team.
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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.
