Biden Administration aiming to close loophole related to overdraft fees

Courtesy: Joe Biden White House Press Team
Courtesy: Joe Biden White House Press Team

(Washington, DC)  --  Consumers are about to save at the bank when it comes to overdraft fees.  

The Biden Administration and The Consumer Financial Protection Bureau today unveiled new regulations for overdraft fees that are expected to go into effect in 2025. Banks will now have to choose between offering overdraft loans for profit or a courtesy service, dropping fees by over 50%.  

The rule changes will affect around 175 banks nationwide.  

"Decades ago, overdraft loans got special treatment to make it easier for banks to cover paper checks that were often sent through the mail," said CFPB Director Rohit Chopra. "Today, we are proposing rules to close a longstanding loophole that allowed many large banks to transform overdraft into a massive junk fee harvesting machine."

Experts say consumers have paid an estimated $280 Billion in bank overdraft fees since 2000.