Ask around and a fair number of people will tell you that a bank cannot charge more than five dollars when an account goes negative. It is a specific, confident, widely repeated belief, and it is wrong in two directions at once. No such limit is in force today. And even the rule that people are remembering was not a five-dollar cap on anything.
The confusion is understandable. A federal overdraft rule really was finalized, really was published, and really did carry a five-dollar figure. It simply never applied to a single checking account, because Congress disapproved it months before its effective date. What survives is a different kind of protection entirely, and knowing which one is real changes what a household can actually do about an overdraft fee.
The rule people are remembering, and what it actually did
The Consumer Financial Protection Bureau issued “Overdraft Lending: Very Large Financial Institutions” on December 12, 2024. It was published in the Federal Register on December 30, 2024 at 89 FR 106768, with an effective date of October 1, 2025. It reached only insured depository institutions and credit unions with more than $10 billion in assets, and it expressly left the framework for institutions at or below $10 billion alone.
Its mechanism was not a price ceiling. The rule narrowed a longstanding Regulation Z exception so that “above breakeven overdraft credit” from those very large institutions would count as consumer credit under the Truth in Lending Act. An institution could establish whether it was above breakeven in one of two ways: calculate its own direct costs and charge-off losses under a standard set out in the rule, or rely on a benchmark fee of $5. A bank that preferred to keep charging $35 was never forbidden from doing so. It would have owed the disclosures that come with extending credit — annual percentage rates, account-opening disclosures, periodic statements.
The $5 itself was a late adjustment. The Bureau had floated four alternatives in the proposal, at $3, $6, $7 and $14, and in the final rule it raised its proposed $3 benchmark to $5 to account for costs commenters raised, including overdraft notices, branch servicing, collection, vendors, compliance and technology.
Free retirement updates: Main Street money decisions get easier when the numbers are explained without jargon. The free Retirement Shield newsletter delivers that help in a short email. Sign up free.
Congress ended it under the Congressional Review Act
Both chambers passed a joint resolution disapproving the rule, and the President signed it. The CFPB’s own compliance page states the date plainly and states the consequence in one sentence: “Consistent with the joint resolution, the Final Rule has no force or effect. The remainder of Regulations E and Z are unchanged and remain in force and effect.” That notice remains the Bureau’s published position on the rule, and it puts the signing on May 12, 2025.
The Congressional Review Act does something a court challenge would not have done. A rule disapproved under it cannot be reissued in substantially the same form unless Congress passes new legislation authorizing it. So this is not a rule sitting in limbo awaiting a different administration. Absent an act of Congress, the five-dollar benchmark is gone for good. One detail is worth stating outright rather than guessing at: the public law number assigned to that resolution is reported inconsistently across secondary sources and could not be confirmed against the official congressional record for this article, so it is not printed here.
The overdraft protection that did survive is a consent rule, not a price rule
Regulation E remains in force, and its overdraft section carries no dollar figure at all. Under 12 CFR 1005.17(b), a financial institution may not charge a fee for paying an ATM or one-time debit card transaction through its overdraft service unless it has given the customer a written notice segregated from all other information, provided a reasonable opportunity to opt in, obtained affirmative consent, and confirmed that consent in writing along with notice of the right to revoke it.
Two companion provisions matter more than most depositors realize. A bank may not condition the payment of overdrafts on checks, ACH transactions or other transaction types on the customer consenting to ATM and debit overdraft coverage, and it may not decline those other transactions because the customer withheld consent. It must also give customers who do not opt in the same account terms, conditions and features it gives customers who do.
Where the limit on an overdraft fee actually comes from now
With the CFPB rule void and Regulation E silent on price, the number a bank charges is set by its own deposit account agreement and fee schedule. That is the document to read, and the line to look for is any daily maximum on the number of overdraft fees, because the fee amount multiplied by that maximum is the real exposure on a bad day.
The one lever that is federal, free and immediate is the opt-in itself. Because the regulation requires notice of the right to revoke consent and forbids the bank from stripping account features or refusing to pay checks in response, revoking the opt-in shuts off that entire category of fee without costing anything else on the account. It is a narrower protection than a five-dollar cap would have been. It is also the one that exists.
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.
More Financial Reading
