A resolution to be considered Wednesday would reverse CFPB’s $5 cap on big bank junk fees of $35+
WASHINGTON – Tomorrow, the House Financial Services Committee will consider legislation introduced by Committee Chairman French Hill (R-AR) and Senate Banking Committee Chairman Tim Scott (R-SC) to repeal a recent CFPB rule to limit excessive junk fees imposed by big banks on cash-strapped people. Several Republican members of the committee have already endorsed the resolution, but not all.
The Consumer Financial Protection Bureau’s (CFPB)s overdraft lending rule, finalized in December 2024, caps most big bank overdraft fees at just $5, down from the typical $35 charge per transaction, while allowing banks to offer more transparent, safer overdraft lines of credit with no price cap. The Bureau estimates the rule will save the 23 million households who pay overdraft fees $5 billion a year. If the rule is overturned, the average household that pays overdraft fees will lose $225 a year.
“Members of Congress should side with voters who are struggling with high prices, not Wells Fargo, Chase and other big banks that reap billions in profits from hidden fees on people trying to make ends meet. The CFPB’s overdraft fee rule will stop exploitative practices by big banks, improve transparency, and put $5 billion back into the pockets of everyday people,” said Lauren Saunders, associate director of the National Consumer Law Center.
Ahead of the hearing, more than 275 consumer, labor, faith-based, and community organizations submitted a letter to Congress urging it to close a “paper-check era loophole” that has allowed big banks to trick people into paying excessive overdraft fees and earn billions in profits off of the most vulnerable families.
The rule lowers most so-called “courtesy” overdraft fees but leaves big banks a variety of options to cover overdrafts, including safer, more transparent overdraft lines of credit with no price limit and the same disclosure requirements as credit cards. The rule only applies to very large institutions with over $10 billion in assets, many of which have already adopted similar protections. Smaller banks and credit unions are exempt.
“Polling is clear: People think $35 overdraft fees are unfair, and banks shouldn’t trick you into paying a $35 fee on the average $23 debit card overdraft repaid in 3 days,” Saunders added. “Congress should be hard at work addressing high costs and inflation, not helping to increase profits at big banks on the back of working families.”
Related Resources
- Press Release: Bill to Overturn CFPB Overdraft Fee Rule Would Hurt Families, Allow Big Banks to Keep $5 Billion in Excessive Fees, Feb. 13, 2025
- Issue Brief: Overdraft Rule Returns $5 Billion in Big Bank Junk Fees to Consumers’ Pockets, Jan. 29, 2025
- Statement Before Senate Banking Committee on Overdraft Fees and Their Effects on Working Families, May 4, 2022
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