• House and Senate pass legislation repealing a CFPB rule that would cap overdraft fees at $5 or limit them to actual bank costs.

• Large banks could continue charging $35 per overdraft, a practice critics say disproportionately affects low-income and minority customers.

• Consumer advocates urge President Trump to veto the repeal, warning that consumers stand to lose $5 billion annually in savings.

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The U.S. House of Representatives voted today to repeal a major consumer protection rule issued by the Consumer Financial Protection Bureau (CFPB), which aimed to limit excessive overdraft fees charged by large banks and credit unions. The vote follows the Senate's approval of a similar measure last week, sending the resolution to President Trump for final consideration.

If signed into law, the repeal would strike down a rule finalized by the CFPB in 2024 that curbs overdraft fees at major banksthose with more than $10 billion in assets.

Under the rule, financial institutions would have to either limit fees to $5 or justify charges based on actual costs or losses. The CFPB estimated that the rule could save consumers $5 billion annually, or $225 per household affected by overdraft charges.

Repealing the CFPBs limits on overdraft fees gives big banks the green light to rip off their customers, said Chuck Bell, advocacy director at Consumer Reports. This is especially troubling when so many families are struggling with high living costs.

Charges are punitive

Consumer advocates have long argued that overdraft fees are punitive, especially considering that most overdraft transactions are under $26 and repaid within three daysa practice that the CFPB says can amount to an APR of over 16,000%.

The burden of these fees falls disproportionately on low- and moderate-income households, particularly in communities of color. Black consumers are 69% more likely, and Hispanic consumers 60% more likely, than white consumers to have paid at least one overdraft or non-sufficient funds fee in the past year.

Banks, meanwhile, support the repeal, arguing that price controls stifle consumer choice. The Consumer Bankers Association claims the rule would do more harm than good, asserting that limits on overdraft fees may reduce access to short-term liquidity for customers who rely on such services.

Despite opposition from 23 state attorneys general, who urged Congress to preserve the rule, both chambers passed the repeal along largely partisan lines. New York Attorney General Letitia James called the repeal a handout to big banks and said consumers should not be punished with outrageous fees for a minor mistake.

"To keep up with the ever-changing consumer finance market, the Consumer Financial Protection Bureau issued a rule, which would have simply ensured that newer market players comply with existing law. But because these newer products, digital payment applications and digital wallets, are run by the largest and most powerful tech companies, our nations lawmakers folded and voted to reverse the rule," saidChristine Hines, Senior Policy Director at the National Association of Consumer Advocates.

The final decision now rests with President Trump, who has not yet indicated whether he will sign or veto the resolution. His recent rhetoric on deregulation and banking policy, however, has consumer advocates bracing for the worst.