House: vote NO on resolution that increases overdraft fees
By Bartlett Naylor
March 4, 2025
The Honorable French Hill, Chair
The Honorable Maxine Waters, Ranking Member
Honorable Members
House Financial Services Committee
Washington, DC 20515
Please Vote NO on Overdraft Fee/ H.J. Res. 59
Dear Committee members,
On behalf of more than 500,000 members and supporters of Public Citizen[1], we urge you to vote NO on H.J. Res. 59, titled “Disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to Overdraft Lending: Very Large Financial Institutions,” which is scheduled for a vote March 5 before the House Financial Services Committee, as provided under the Congressional Review Act (CRA).
Overdraft fees began as a courtesy rendered by bankers to clients who naturally did not want their checks returned (bounced) because of insufficient funds in their accounts. Bankers might charge a small fee, or no fee at all, provided the client promptly restored adequate funds into the account. Because of the benign nature of this ad hoc practice, regulators did not attempt to prescribe rules under the Truth in Lending Act that would govern the level of those fees. In the 1990s, however, with payments moving from paper checks to digital transactions, including credit and debt cards, bankers began charging routinely and at higher rates for overdrafts. Bankers turned an occasional courtesy into a routine junk fee machine. Today, total fees nationwide surpass $30 billion because many banks charge $35 for each overdraft, regardless of the size of the overdraft. In fact, the $35 fees applies on average to a $26 overdraft.
Further, some banks reorder the monthly charges to a debit card to maximize how many overdraft fees they can charge.[2]
The Consumer Financial Protection Bureau (CFPB) finalized a rule Dec. 30, 2024 to cap this charge at $5. The Bureau estimates this would save consumers roughly $5 billion annually. The rule only applies to banks with more than $10 billion in assets. The rule also provides large banks with other means of offering transparent credit terms for customers who wish to spend more than what is in their accounts.
The banking industry claims this will reduce credit available to needy customers. Instead, it will protect vulnerable consumers. Indeed, many large banks have already reduced their overdraft fees following adverse publicity.
This CRA vote represents a policy choice. Large banks should not profit an extra $5 billion on the backs of struggling Americans. We ask the members of this committee to vote NO on H. J. Res. 59.
For questions, please contact Bartlett Naylor at bnaylor@citizen.org.
Sincerely,
Public Citizen
[1] Public Citizen is a nonprofit consumer advocacy organization with members in all fifty states. Public Citizen regularly appears before Congress, administrative agencies, and courts to support the enactment and enforcement of laws protecting consumers, workers, and the general public. Public Citizen members hold bank accounts and may be subject to overdraft fees.
[2] Consider a person with $400 in the account who charges, in order, $50, $60, $100, $200, and then $300. Ordinarily, the fee would only be assessed on the final charge. By re-ordering them in reverse, the bank could then assess an overdraft fee four times.