The next time you overdraw your checking account at one of the country’s largest banks, the fee will almost certainly be $29 to $35, the same range it has been for years. A federal rule that would have capped that charge at $5 for big banks was permanently killed before it ever took effect, and as of June 2026, the relief that millions of households were expecting simply does not exist.
On May 12, 2025, President Trump signed S.J.Res. 18, a Congressional Review Act resolution that formally disapproved the Consumer Financial Protection Bureau’s overdraft fee cap. The CFPB’s own compliance page now confirms the rule never went into effect. Under the CRA, a disapproved rule cannot be reissued in substantially the same form unless Congress passes new authorizing legislation. This particular cap is permanently off the table.
What the CFPB rule would have changed
The CFPB finalized its overdraft regulation in December 2024, targeting banks and credit unions with more than $10 billion in assets. The centerpiece was a $5 benchmark fee that would have replaced the $30-plus charges standard at most major banks. The rule was set to take effect October 1, 2025.
The agency projected the change would save American households roughly $5 billion per year. To put that in personal terms: someone living paycheck to paycheck who overdraws three or four times a year would have saved $90 to $120 annually under the cap. That money now continues flowing to bank fee revenue.
Banks also had the option of treating overdraft as a form of credit subject to Truth in Lending Act disclosures, including APR calculations and ability-to-repay assessments. The CFPB positioned the $5 benchmark as the simpler path, letting institutions avoid complex underwriting requirements while still bringing fees closer to the actual cost of covering a short-term shortfall.
Why Congress blocked it
The CRA resolution passed largely along party lines. Supporters of the disapproval argued the CFPB had overstepped its statutory authority and warned that a strict fee cap could backfire on the people it was meant to help. Their concern: banks might respond by eliminating overdraft coverage altogether, tightening account eligibility, or layering on new monthly maintenance fees to replace lost revenue. They framed overdraft as an optional service that many customers actively prefer over having a debit card declined at the register.
Opponents saw it differently. They pointed to years of CFPB complaint data showing that overdraft fees fall hardest on lower-income account holders and that a small percentage of customers, those who overdraw most frequently, generate a disproportionate share of fee income. From that perspective, killing the rule preserved a pricing structure that functions as high-cost, short-term lending without the consumer protections that normally accompany credit products.
Some banks already cut fees on their own
The federal cap is dead, but the overdraft landscape has shifted since 2019. Several large banks made voluntary changes in recent years, driven partly by regulatory pressure and partly by competition for depositors:
- Capital One announced the elimination of all overdraft and non-sufficient-funds fees in December 2021, with the change fully rolling out in early 2022.
- Citibank dropped overdraft fees, returned-item fees, and overdraft protection fees starting in February 2022.
- Bank of America cut its overdraft fee from $35 to $10 and eliminated non-sufficient-funds charges, with the new pricing taking effect in May 2022.
- Ally Bank eliminated overdraft fees entirely in June 2021.
Those voluntary reductions remain in place. But without a federal floor, any bank can reverse course and raise fees with proper account-agreement notice. And many large institutions, including some of the biggest by deposit volume, never reduced their overdraft charges at all. Bankrate’s 2024 checking account survey found the average overdraft fee among banks that still charge one had dropped to $26.61, the lowest figure the survey had recorded, but fees at individual big banks still commonly sit at $34 or $35.
How to sidestep overdraft fees without waiting for Washington
Federal overdraft relief is off the table, but the tools available to individual account holders have quietly expanded in recent years. The most powerful is also the simplest: opting out of debit-card and ATM overdraft coverage. Under the Federal Reserve’s Regulation E, banks cannot charge overdraft fees on one-time debit card purchases or ATM withdrawals unless you have explicitly opted in. Revoking that consent with a phone call means those transactions will simply be declined at no charge. The opt-out does not cover checks or recurring electronic payments, but it eliminates the most common surprise-fee trigger.
Beyond opting out, linking a backup funding source can serve as a low-cost safety net. Many banks offer overdraft transfer services that pull from a linked savings account or a small line of credit. Several large banks, including Chase and Wells Fargo, have eliminated the transfer fee for this service in recent years. Peer-to-peer payment apps such as Zelle and Venmo also give account holders a fast way to move money from a partner, family member, or secondary account within minutes, potentially heading off an overdraft before it posts.
Timing matters, too. Banks and fintechs including Chime, Wells Fargo, and U.S. Bank now release direct-deposit paychecks up to two days early. Getting paid on Wednesday instead of Friday can prevent the end-of-week overdraft that catches many people off guard. And most banking apps let you set a push notification when your balance drops below a threshold you choose; a $50 or $100 alert gives you time to transfer funds or delay a purchase.
For people who overdraw several times a year, the math on switching banks is straightforward. Online banks and credit unions are far more likely to offer low-fee or no-fee overdraft options. Moving from a $35-per-incident bank to one that charges nothing could save well over $100 annually, roughly the same benefit the CFPB rule would have delivered.
What happens next with overdraft regulation
The CRA’s “substantially similar” prohibition means the CFPB cannot simply reissue the same rule under a future administration. Any new federal overdraft cap would require either fresh congressional legislation or a regulation different enough in structure to survive legal challenge. Neither appears imminent, particularly given the CFPB’s reduced operational footprint under the current administration.
The bureau still holds enforcement authority under existing consumer protection statutes. Past cases have targeted banks for reordering transactions to maximize fees, charging overdraft fees without proper consent, and misleading customers about how overdraft programs work. But enforcement actions are reactive and case-specific: they punish bad actors after the fact, not set a price ceiling.
Why state-level caps remain unlikely to fill the gap
A handful of states have explored their own overdraft fee limits or disclosure requirements, though no state has enacted a cap comparable to what the CFPB proposed. National banks can also invoke federal preemption to argue that state fee limits do not apply to them, a legal barrier that has discouraged ambitious state-level efforts.
For the foreseeable future, the cost of overdrawing your account at most large banks will be set by the banks themselves. According to Bankrate senior industry analyst Ted Rossman, banks that voluntarily cut fees did so in part because “the competitive pressure and the public scrutiny made it hard to justify $35 anymore,” but that same pressure has not reached every institution. The distance between a $5 fee and a $35 fee is $30 per incident, a cost that millions of American households will keep absorbing every time a paycheck lands a day late or an automatic payment posts a dollar too soon.
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.
