The Consumer Financial Protection Bureau (CFPB) has introduced a new rule to limit overdraft fees for banks and credit unions with assets over $10 billion, potentially saving consumers $5 billion annually.

The rule offers three options for these institutions: charge a $5 overdraft fee, cover costs or losses, or charge higher fees if they disclose terms and comply with lending laws.

Currently, banks charge an average of $35 per overdraft.

The rule is part of efforts to curb excessive bank fees and protect vulnerable consumers, CBS News has reported.

However, the banking industry plans to challenge the rule, which is set to take effect in October 2025.

Written by B.C. Begley