The Consumer Financial Protection Bureau (CFPB) has announced a new rule that will limit the fees charged by banks for overdrafts.

• The Consumer Financial Protection Bureau on Thursday released the final version of a rule restricting banks' capacity to impose overdraft fees.
• It says the rule will save American consumers $5 billion annually.
• The CFPB's overdraft rule will be implemented on October 1, 2025, but its future is uncertain.

The Consumer Financial Protection Bureau has released the final version of a rule restricting banks' capacity to impose overdraft fees. The rule is expected to save American consumers $5 billion yearly.

Banks have the option to charge $5 for overdrafts, which is significantly lower than the average fee of approximately $35 per transaction, or set a fee that covers the lenders' costs, or charge any fee while disclosing the interest rate of the loan.

"The CFPB is taking action against the largest banks for exploiting a legal loophole that has resulted in billions of dollars being drained from Americans' deposit accounts. The CFPB is putting an end to excessive junk fees and making big banks disclose the interest rate they charge on overdraft loans."

Since 2000, overdraft fees have generated $280 billion in revenue for the banking industry, but banks' revenue from this service has been declining due to various factors. Some lenders, such as and , have reduced or eliminated the fees, or limited the types of transactions that trigger them.

Banks and credit unions having assets of at least $10 billion are subject to the CFPB rule.

The CFPB's effort, part of a flurry of activity from the regulator in the waning days of the Biden administration, faces opposition from U.S. banking groups that have successfully stymied other efforts from the regulator. For example, a rule capping credit card late fees at $8 per incident, set to take effect in May, has been held up in federal court.

The CFPB's overdraft rule will be implemented on October 1, 2025, but its future is uncertain.

The outcome of the overdraft rule was uncertain prior to Donald Trump's election victory last month due to industry opposition. However, it is predicted that Trump will appoint a new CFPB head in the near future who will not support the Biden administration's efforts to regulate banking practices.

Overdraft rule proposed by Biden's war on junk fees could limit access to overdraft services and lead customers to payday loans, according to lobbying groups from the banking industry.

The Consumer Bankers Association stated on Thursday that it was considering all possible strategies to challenge the rule.

This story is developing. Please check back for updates.