Senate: Vote NO on Bank Overdraft Fees
March 25, 2025
Honorable Senator
United States Senate
Washington, D.C. 20510
Please vote NO on S.J. Res. 18 A joint resolution disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to “Overdraft Lending: Very Large Financial Institutions.”
Dear Honorable Senator,
On behalf of more than 500,000 members and supporters of Public Citizen, we ask you to vote NO on the Congressional Review Act (CRA) S.J. Res. 18 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 shortly before the full Senate.
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.[1]
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 senators to vote NO on S.J. Res 18.
For questions, please contact Bartlett Naylor at bnaylor@citizen.org.
Sincerely,
Public Citizen
[1] 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.