Biden Administration Proposes Rule to Limit Overdraft Fees

The proposed rule, which could take effect in October 2025, faces opposition from bank trade groups but support from consumer advocacy groups.

The Biden administration has proposed a rule that would limit overdraft fees charged by banks, which currently collect about $9 billion annually from such fees.
The proposed rule would treat overdraft programs as credit programs, requiring them to abide by the same requirements that apply to credit cards, such as disclosure of annual interest rates, fee limits in the first year, and reasonable penalty fees.
The rule would apply to banks and credit unions with more than $10 billion in assets and could take effect in October 2025 if approved.
Bank trade groups have criticized the proposal, arguing that it overlooks voluntary changes banks have made in recent years and could push consumers into the hands of less-regulated, more-costly alternatives.
Consumer advocacy groups support the rule, accusing banks of profiting off financially insecure customers burdened by overdraft fees.