A US bank regulator says it’s shutting down a “legal loophole” that’s costing customers $5 billion in overdraft fees per year.

The Consumer Financial Protection Bureau (CFPB) says a new rule will force large banks to either limit overdraft fees to $5, align them to actual costs and losses, or treat overdraft loans like other credit products.

That would mean the banks have to disclose interest rates, provide account-opening disclosures, and give consumers the choice to opt in or out.

With typical overdraft fees currently clocking in at around $35, the CFPB says the rule will save customers $5 billion per year.

Says CFPB Director Rohit Chopra,

“For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts.

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.”

The new rule applies to banks and credit unions with at least $10 billion in assets, and is set to take effect on October 1st of 2025.

Bank lobbying groups have warned the rule would impact their ability to provide overdraft services to customers, potentially forcing people to use more expensive alternatives such as payday loans.

 

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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The post US Bank Regulator Terminates ‘Legal Loophole’ That’s Draining $5,000,000,000 From Customer Accounts Per Year appeared first on The Daily Hodl.

A US bank regulator says it’s shutting down a “legal loophole” that’s costing customers $5 billion in overdraft fees per year.

The Consumer Financial Protection Bureau (CFPB) says a new rule will force large banks to either limit overdraft fees to $5, align them to actual costs and losses, or treat overdraft loans like other credit products.

That would mean the banks have to disclose interest rates, provide account-opening disclosures, and give consumers the choice to opt in or out.

With typical overdraft fees currently clocking in at around $35, the CFPB says the rule will save customers $5 billion per year.

Says CFPB Director Rohit Chopra,

“For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts.

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.”

The new rule applies to banks and credit unions with at least $10 billion in assets, and is set to take effect on October 1st of 2025.

Bank lobbying groups have warned the rule would impact their ability to provide overdraft services to customers, potentially forcing people to use more expensive alternatives such as payday loans.

 

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney

The post US Bank Regulator Terminates ‘Legal Loophole’ That’s Draining $5,000,000,000 From Customer Accounts Per Year appeared first on The Daily Hodl.