On December 12, 2024, issued a final rule to close an outdated overdraft loophole that exempted overdraft loans from lending laws. The Bureau’s final rule on overdraft fees applies to the banks and credit unions with more than $10 billion in assets that dominate the U.S. market.
The CFPB amended Regulations E and Z to update rules for overdraft credit offered by very large banks. This change ensures that these overdrafts follow the same consumer protection rules as similar financial products unless the overdraft fee is a small amount that only recovers estimated costs and losses. The changes will allow large banks several options to manage their overdraft lending program including the following:
Cap their overdraft fee at $5;
Cap their fee at an amount that covers costs and losses; or
Disclose the terms of their overdraft loan just like other loans.
Read the CFPB’s announcement here.
The final rule can be found here.