CFPB issues final rule capping overdraft fees

The Consumer Financial Protection Bureau issued a final rule on overdraft services that will cap fees at banks and credit unions with more than $10 billion in assets.

Details: The CFPB said the rule—which is scheduled to take effect on Oct. 1, 2025—will impose three options for covered banks to manage their overdraft lending programs:

• Cap their overdraft fee at $5.

• Charge a fee that covers no more than costs or losses.

• Extend overdraft services by treating them as extensions of credit and complying with federal lending laws, including disclosing any applicable interest rate.

ICBA Response: In a national press release, ICBA said it strongly opposes the rule, which would harm customers and businesses that rely on overdraft services and force consumers to rely on payday lenders and other unscrupulous funding sources. It called on the incoming administration and Congress to overturn the rulemaking and said it looks forward to continuing to work with policymakers to minimize the negative impact of this and other CFPB policies.

ICBA View: In a message to community bankers, ICBA President and CEO Rebeca Romero Rainey said ICBA will continue fighting to oppose this rulemaking, noting the CFPB issued it at the 11th hour of the outgoing administration. “ICBA is in close contact with policymakers—including the incoming administration and Congress—to reject and overturn this harmful rulemaking,” she said.

Legal Action: Following the release of the final rule, several industry groups have filed a lawsuit challenging the legal basis of the rulemaking. ICBA strongly supports the suit and will be filing a friend-of-the-court brief backing it.