A rule finalized by the Consumer Financial Protection Bureau in December 2024 would have capped most bank overdraft fees at $5. It never took effect. Congress killed it in the spring of 2025, and the fee data collected since then shows exactly what that repeal costs the typical account holder: the average overdraft fee now runs $26.77, more than five times the canceled cap, and 94 percent of checking accounts still charge one.
Congress Voted to Repeal the $5 Overdraft Cap in May 2025
The CFPB rule, formally titled “Overdraft Lending: Very Large Financial Institutions,” applied only to banks and credit unions with more than $10 billion in assets, a group that covers most of the country’s largest retail banks. It offered those institutions three paths: cap the per-overdraft fee at a flat $5, set a higher fee tied to the institution’s actual cost of extending and collecting the overdraft, or stop charging a flat fee altogether and instead structure overdraft coverage as a loan, complete with the disclosures the Truth in Lending Act requires. The rule was published in the Federal Register on December 30, 2024, and was set to take effect in October 2025 for those largest banks.
That effective date never arrived. On February 13, 2025, the chairs of the House Financial Services Committee and the Senate Banking Committee introduced companion resolutions under the Congressional Review Act to void the rule, and the Senate and House passed S.J.Res. 18 in March and April 2025, largely along party lines. President Trump signed it into law as Public Law 119-10 on May 9, 2025. The Senate Banking Committee confirmed the signing the same week, ending the rule before it ever reached a single bank’s fee schedule. The same week, Congress used the same tool to repeal a related CFPB rule that would have extended oversight to large digital payment apps, part of a broader rollback of Biden-era CFPB rulemaking.
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A Repealed Rule Can’t Come Back in the Same Form
Because Congress used the Congressional Review Act rather than leaving the rule’s fate to a future CFPB director, this repeal is unusually permanent. Under the CRA, an agency cannot reissue a rule that is “substantially the same” as one Congress has disapproved unless a new law specifically authorizes it. The congress.gov summary of the vote describes that effect: the CFPB is barred from revisiting an overdraft fee cap in anything resembling this form without new legislation from Congress. That is why consumer advocates who backed the $5 cap have shifted to pushing for a new law rather than a new rulemaking.
The Real Numbers: $26.77 Average Overdraft Fee, Record-Low $16.82 NSF Fee
With the cap gone, the fee landscape looks almost exactly like it did before the CFPB ever proposed the rule. Bankrate’s 2025 Checking Account and ATM Fee Study, based on a survey of 245 banks and credit unions conducted between June and July, found the average overdraft fee is $26.77, down just 1 percent from $27.08 the year before. Ninety-four percent of the checking accounts Bankrate surveyed still charge an overdraft fee when a transaction would otherwise take the balance negative.
Non-sufficient-funds fees, charged when a bank declines a transaction instead of covering it, moved further. The average NSF fee fell for a fourth straight year to a record-low $16.82, and the share of accounts that charge one dropped to a record-low 61 percent. Both trends predate the CRA repeal and reflect years of bank competition and earlier CFPB pressure, not the canceled $5 rule, which never had a chance to move either number.
Why the Cap’s Death Leaves 94 Percent of Accounts Exposed
For a household living close to the edge, the gap between $5 and $26.77 is the whole story. A single overdrawn debit purchase at a bank charging the average fee now costs more than five times what the CFPB’s rule would have allowed at the country’s largest banks, and no federal ceiling has replaced it. Some state laws touch state-chartered banks and credit unions, but federally chartered banks, which hold the bulk of consumer checking accounts, answer only to their own posted fee schedule now that the rule is gone.
Bankrate’s survey points to a few ways households can avoid the fee without a federal cap: opting out of overdraft coverage so a shortfall transaction is simply declined instead of covered at a cost, linking a savings account for automatic overdraft transfers, or turning on low-balance alerts through a bank’s app. None of those options existed as a federal requirement under the repealed rule, which would only have set a fee ceiling, not eliminated the fee itself.
Numerous consumer and banking sites still describe the $5 cap as a current rule, and posts online continue to circulate the $5 figure as though it applies today. It does not, and it never applied to a single bank’s actual fee schedule. Anyone budgeting around a $5 worst case should replace that number with their own bank’s posted overdraft fee, since Bankrate’s data shows the typical charge nationwide is now more than $26, over five times what the repealed rule would have allowed.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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