For bank customers, the overdraft fee debate now has two separate parts. One is the federal rule that was approved, then overturned before it took effect. The other is the fee schedule sitting on your own bank account today. Those are not the same thing, and mixing them up can make a routine checking account harder to understand.
What the overturned CFPB rule would have done
The Consumer Financial Protection Bureau finalized an overdraft rule on December 12, 2024, for very large financial institutions. The rule was scheduled to take effect on October 1, 2025, and it covered banks and credit unions with more than $10 billion in assets. Smaller banks and credit unions were not the target of that rule.
Overdraft means a bank allows a transaction to go through even though the account does not have enough money in it. The account balance then falls below zero, and the bank may charge a fee. The CFPB rule would have given covered institutions three ways to handle that fee. They could charge a flat $5 fee. They could charge a fee tied to estimated costs and losses. Or they could keep offering overdraft as a form of credit, while following lending-law requirements such as disclosing any applicable interest rate.
That last option matters because it shows the rule was not simply a nationwide $5 cap. The $5 fee was one route. The cost-based route was another. Treating overdraft as credit, with the required disclosures, was a third. The CFPB said the rule was meant to close what it viewed as a long-standing overdraft loophole and estimated large consumer savings, but those savings were tied to a rule that never became active.
Readers who want the agency version can review the CFPB’s final rule page and its archived announcement on the overdraft rule.
What Congress changed
Congress used the Congressional Review Act to disapprove the overdraft rule, and the President signed the resolution on May 9, 2025, as Public Law 119-10. The Congressional Review Act is a law that lets Congress overturn certain recent federal agency rules. When that happens, the rule is treated as having no force or effect.
The CFPB now says the overdraft final rule has no force or effect. The agency also says the rest of Regulations E and Z remain in force. Regulation E covers many electronic fund transfer protections, while Regulation Z implements major federal credit disclosure rules. In plain English, the special overdraft rule for very large institutions is gone, but other consumer finance rules did not disappear with it.
The disapproval also limits the CFPB from issuing a substantially similar rule unless Congress authorizes it in a future law. The public sources do not settle exactly how that phrase would apply to every possible future agency action. That is a legal question with room for interpretation, so it is better to treat the point narrowly: this specific rule is no longer in effect, and a close remake would face a congressional barrier.
What customers may see in real accounts
As of June 27, 2026, there is no federal cap that sets overdraft fees at $5 nationwide. Banks set their own overdraft fee levels and account terms, subject to laws and rules that still apply. That means two households can have very different experiences even if both use ordinary checking accounts.
During the years when overdraft fees were under heavy public and regulatory pressure, many institutions changed their practices. Some added grace periods, which give a customer time to bring an account balance back above zero before a fee sticks. Some added a de minimis threshold, a phrase that usually means a small-dollar cushion. For example, an account might be allowed to go a few dollars negative before a fee is charged, depending on the bank’s terms.
Other features can include a daily cap on the number of overdraft fees, earlier access to direct deposit, or an account type that does not charge overdraft fees. These features can be useful to understand, but they are not universal. They may depend on the specific account, the type of transaction, and whether the customer has opted in or out of certain services.
One practical detail deserves more attention than it usually gets: the no-fee cushion. If a bank reduces the cushion, a small shortfall that used to pass without a fee may now trigger one. A $4 negative balance and a $40 negative balance can be treated differently under some account agreements, but the exact cutoff is a bank-by-bank term.
The numbers show why the debate did not end
Overdraft revenue fell sharply across the banking industry between about 2020 and 2023, by close to half under some measures. That decline reflected a mix of public pressure, agency attention, changed bank policies, and customer behavior. But the decline did not mean overdraft fees disappeared.
The National Consumer Law Center reported that banks and credit unions collected more than $12 billion in overdraft and NSF fees in 2025. NSF stands for non-sufficient funds. It usually refers to a fee tied to a transaction being declined or returned because there was not enough money in the account. Overdraft and NSF fees are related, but they are not always the same charge.
The same consumer group reported that about a quarter of people live in households that pay overdraft fees each year. It also said overdraft revenue at the largest banks rose in 2025 compared with 2023. Consumer advocates argue that, with the federal rule gone, states may become the main venue for new limits or disclosures. The available sources do not provide a complete state-by-state list of laws, so customers should check official state sources if they need local rules.
You can read the National Consumer Law Center’s summary here: Overdraft Fees Rising In Absence of CFPB Rule.
How to check your own bank’s current terms
The best starting point is the current personal deposit account agreement or fee schedule for your account. These documents are often posted on a bank’s website, though they can be easier to find through a site search than through the main menu. Older news articles about the 2024 rule may not match the terms in effect in 2026.
When reading the fee schedule, look for the actual overdraft fee, the maximum number of fees that can be charged in one day, and the no-fee cushion amount. Those three numbers often tell you more than a headline about whether a bank is “reducing” or “simplifying” fees.
If you call customer service or visit a branch, consider asking specific questions and keeping the answers with the date. For example:
- What is the current overdraft fee on this exact account?
- How many overdraft fees can post in one day?
- Is there a no-fee cushion, and what dollar amount is it?
- Is there a grace period before a fee becomes final?
- Are any overdraft features optional, and are they turned on for this account?
- Has the cushion, fee amount, or daily cap changed since 2023?
This is not about choosing a particular bank or product. It is about matching the account terms to the way the household actually uses the account. A person who keeps a large buffer may focus on different terms than a person whose paycheck and rent payment regularly land within a day of each other.
Common misunderstandings to avoid
The first misunderstanding is that overdraft fees are capped at $5 across the country. That is not correct as of this 2026 publication date. The $5 figure came from one option in a CFPB rule that Congress overturned before it took effect.
The second misunderstanding is that the rule’s reversal means there are no consumer protections left. The CFPB says the rest of Regulations E and Z remain in force, and other federal and state laws may still apply. The better conclusion is narrower: the special very-large-institution overdraft rule is not in effect.
The third misunderstanding is that only the headline fee matters. A lower fee with a smaller cushion may still cost some customers money if small shortfalls trigger charges more often. A higher stated fee with a grace period may operate differently. The details sit in the account agreement, not in the headline.
For general federal information, the CFPB’s current compliance page states the status of the overturned rule: Overdraft Lending: Very Large Financial Institutions. For personal questions about a dispute, state law, or legal rights, check official sources or speak with a qualified professional. This article is educational and is not personal financial, legal, or tax advice.
Please seek a professional. This article is general information, not financial, tax or insurance advice. Please seek a licensed financial, tax or insurance professional about your own situation.
