CFPB Director Rohit Chopra testifies at a House Financial Services Committee hearing on June 14, 2023.
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this Consumer Financial Protection Bureau Final announced on Thursday Version one of rule Limit banks’ ability to charge overdraft fees. The rule is said to save American consumers $5 billion annually.
The regulator said banks could choose to charge $5 for overdrafts – a significant drop from the average fee of around $35 per transaction – or limit the fee to an amount that covers the lender’s costs, or charge any fee while disclosing the overdraft interest rate. cost.
“The largest banks have long exploited legal loopholes to siphon billions of dollars from Americans’ deposit accounts,” CFPB Director Rohit Chopra said in a report. statement. “The CFPB is cracking down on these exorbitant junk fees and demanding that big banks come clean about the interest rates they charge on overdraft loans.”
Although all overdraft fees have beenrich The service has generated $280 billion in revenue since 2000, but banks’ revenue from the service has been declining, according to the CFPB. This is because the lender includes JPMorgan Chase and Bank of America Fees have either been lowered or the types of transactions that trigger them have been limited, while some banks have eliminated fees entirely.
The CFPB rules apply to banks and credit unions with at least $10 billion in assets.
Effort is part of a series of efforts Activity The measure, introduced by the CFPB in the waning days of the Biden administration, faced fierce opposition from U.S. banking groups that have successfully stymied other efforts by the regulator. For example, the rule cap credit card An $8 per incident late fee that was set to take effect in May has been put on hold by a federal court.
The CFPB said its overdraft rule will take effect on October 1, 2025, but its final fate is unclear.
Even before Donald Trump won the election last month, the fate of the overdraft rule would have been unclear due to industry resistance. But Trump is expected to name a new CFPB head next month, which is unlikely to support Biden-era efforts to rein in bank activity.
Bank lobby says overdraft rules first recommended Part of Biden’s war on junk fees, the bill would reduce access to overdraft services and could leave customers with worse options, such as payday loans.
The Consumer Bankers Association said Thursday it was “exploring all options” to resist the rule.
This story is developing. Please check back for updates.
