“For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” said CFPB Director Rohit Chopra. “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.”

This ruling will require banks and credit unions with over $10 million in assets to overhaul their overdraft protection services, giving them several options for how to do so. The most straightforward option is to simply set a cap of $5 per overdraft, a far cry from the average rate of $32 per overdraft reported in 2022.

The banking industry still has overdraft options

While the CFPB is marking this as a victory, consumers should be aware that banks aren’t likely to let this revenue stream disappear without a fight. The $5 cap isn’t their only option.

Institutions may also choose to utilize overdrafting solely as a service and not a profit center, and can therefore cap their fees at a rate that covers their costs and losses. This will allow consumers to continue using the service, but likely at a lower rate than before so as to prevent it from turning a massive profit.

Those that wish to utilize overdrafting to generate revenue may treat overdrafts as loans and disclose fees accordingly. This will allow them to continue charging high rates, but also means the consumer must receive much more detailed information before agreeing to sign up for the service as a line of credit.

The banking industry is pushing back against the new rule. The Consumer Bankers Association, along with other industry groups, filed a lawsuit challenging the rule on the same day it was announced. They argue that overdraft services provide a valuable safety net for consumers and that the CFPB has overstepped its authority.

“The CFPB’s rule on overdraft services harms Americans who need it most–including the 26 million Americans who don’t have access to credit and thus stand to lose the most if overdraft services are restricted,” says CBA President and CEO Lindsey Johnson. “Overdraft services are an essential lifeline for consumers when they experience unexpected expenses.”

Consumers should expect new alternative fees

Marianne Lake is the CEO of Consumer & Community Banking at JPMorgan Chase. Back in July, she warned that if the CFPB’s ruling came to fruition, consumers would pay the price. According to the Wall Street Journal, Lake reportedly said that Chase wouldn’t hesitate to implement new fees for services that are currently available for free, such as checking and savings accounts.

Currently, Chase Bank offers three everyday checking products: a basic account fit for most users, a secure account for those who need to avoid overdrafts entirely, and a “premier” interest-bearing account that offers bonuses such as free money orders and no foreign ATM fees.

All three of these accounts are currently available for free if users meet qualifying activity, such as maintaining a certain balance across their Chase accounts or setting up direct deposits above a specific threshold. But if profits from overdraft fees suddenly disappear, Lake told the Journal there would be consequences. 

“It is not practical for many of the services to be free if we won’t be able to draw from those profit pools,” she said.

While she didn’t specify what changes might be coming, Lake recently spoke at a Goldman Sachs financial services conference in Manhattan and told investors there were “reasons to be optimistic” about 2025. It’s possible that the banking industry is holding out hope for the CFPB ruling to be overturned by the new Trump administration.

Keep a close eye on your accounts in 2025

While we haven’t seen major shifts yet in the way large banks are handling accounts and fees, savvy consumers should watch their accounts carefully and pay close attention to any notices that are sent out. This is especially important if you currently hold accounts at a bank with over $10 million in assets, as those are the institutions being targeted by the CFPB ruling.

There are still plenty of opportunities out there for free checking and savings accounts, with many offering attractive bonuses when you start a relationship with them. No matter where you keep your money, make sure to read the fine print so you meet any required qualifying activity and avoid costly fees.