Congress Killed the $5 Overdraft Fee Cap. Banks Still Collected $3 Billion in 6 Months

For a brief moment in 2024, it looked like overdraft fees were about to get a lot smaller. The Consumer Financial Protection Bureau finalized a rule capping fees at $5 for large banks, unless the bank could show its actual cost or offer the overdraft as a disclosed line of credit instead. Then Congress killed it. Using the Congressional Review Act, lawmakers overturned the rule in the spring of 2025, and President Trump signed the repeal in May, months before the cap’s October 2025 start date. So the cap never kicked in, and banks kept charging full price.

Banks with over a billion dollars in assets collected $2.96 billion in overdraft and NSF (nonsufficient funds) fees in just the first six months of 2026. Annualize that and you’re looking at close to $6 billion for the year. For context, those same banks collected about $12 billion in 2019. Years of public pressure and fintech competition cut that roughly in half, to $5.8 billion by 2023, and it’s been stuck near that level ever since. The repeal didn’t send fees back up. It just took away the rule that would have pushed them down again.

The typical fee at big banks has long been $35, but it varies a lot by bank. Chase charges $34 per overdraft item and caps it at three fees a day, meaning a genuinely bad day at the register can cost you $102 before you’ve even noticed. Bank of America charges $10 per item, capped at two a day, a rate it dropped from $35 back in May 2022, well before the CFPB rule even existed. That’s worth remembering: not every bank needed a federal mandate to treat customers fairly.

Chase alone accounted for 19% of all reported overdraft and NSF revenue in the first half of 2026. Along with Wells Fargo, the two banks dominate the totals, which tells you something about where to look first if you’re trying to avoid this fee.

Twelve percent of Americans paid an overdraft fee in 2025. That number isn’t spread evenly. Lower-income households, young adults, and Black and Hispanic Americans pay these fees at higher rates than the population overall. This isn’t a fee that mostly catches people who overspend recklessly. It’s a fee that catches people living close to the edge of their paycheck, where a $6 coffee run at the wrong moment turns into a $34 penalty.

That’s the part that should bother you regardless of your own banking situation. A fee structure that charges the same flat $34 whether you overdrew by $4 or $400 isn’t really pricing risk. It’s a penalty that hits hardest exactly when someone can least absorb it.

None of this is complicated to fix once you decide to deal with it. Start with balance alerts. Set one for a number above zero, say $100, and treat that number like it’s your actual zero. That buffer gives you time to move money around before you’re anywhere near a real overdraft.

Check your account more than once a week. Most overdrafts happen because someone genuinely lost track of their balance, not because they didn’t have a plan. A thirty-second habit closes that gap.

Look into linking a savings account for automatic overdraft transfers instead of relying on standard courtesy coverage. Most banks charge a small flat fee for this, often $10 or less, or nothing at all, instead of the full overdraft rate. You can also opt out of debit card overdraft coverage entirely. Do that and a transaction that would overdraw your account simply gets declined at the register instead of clearing with a fee attached. Mildly embarrassing, sure, but free.

If your current bank is one of the heavier fee collectors, moving to an online bank is worth the hour it takes. Most online banks don’t charge overdraft fees at all, and they typically come with solid mobile apps and no monthly account fees either. Run the numbers: two Chase overdrafts a month at $34 each adds up to $816 a year. That’s real money that a five-minute account switch puts back in your pocket. While you’re cleaning up bank fees, check whether you qualify for a piece of the $167.5 million non-bank ATM fee settlement, too.

If you use the SuperMoney app to track your spending, set up a low-balance alert there too and check it against your actual bank balance a couple of times a week. Seeing your real, spendable number in one place, rather than guessing based on what cleared last, is usually enough on its own to stop an overdraft before it happens.

Worth understanding the back-and-forth here, because it explains why your bank’s policy might shift again without much warning. The CFPB spent years building the case that overdraft “coverage” often functions like a very expensive, undisclosed loan. Borrow $5 short at the register, pay $34 back almost immediately, and the effective interest rate on that transaction is astronomical if you annualize it. That was the logic behind capping fees at $5 or forcing banks to treat it as disclosed credit with a real interest rate attached.

Banks argued the rule would force them to eliminate overdraft coverage entirely for lower-income customers who rely on it in genuine emergencies, and that argument won out in Congress. Both sides have a real point, honestly. Overdraft coverage does prevent a declined rent payment or a bounced check in a true pinch. It also, unquestionably, generates billions in fees that are disproportionately squeezed out of the people who can least spare them. That tension hasn’t gone away just because the rule did, and it’s very possible we see another attempt at regulation once the current political environment shifts.

Until then, the responsibility for avoiding this fee sits with you, not with a rule that might or might not exist a year from now.