Banks cash in - overdraft fees climb above $12 billion after Trump, Congress slash consumer protection rules
About a quarter of Americans live in households that pay overdraft fees regularly
Overdraft fees are rising again
Consumers paid more than $12 billion in overdraft and NSF fees last year, reversing a downward trend that followed years of regulatory pressure on banks, according to a new report from the National Consumer Law Center.
The report (full copy here) estimates that banks and credit unions collected more than $12.1 billion in overdraft-related fees during 2025. The total marks a significant increase from recent years.
The increased comes after Congress repealed a Consumer Financial Protection Bureau rule that would have capped most overdraft fees at $5.
NCLC argues that overdraft fees remain one of the most expensive forms of short-term credit available to consumers, often hitting people who are already struggling financially.
Biggest banks remain major fee collectors
According to the report, some of the nation’s largest financial institutions continue to generate substantial revenue from overdraft programs.
NCLC said:
JPMorgan Chase collected roughly $1 billion in overdraft fees.
Wells Fargo collected about $1 billion.
Several regional banks also reported substantial increases.
Some of the report’s findings were a bit surprising:
USAA Federal Savings Bank, which caters to the military community, has dramatically increased its overdraft fee revenue since 2023, by a larger percentage than any other bank, primarily by introducing overdraft fees in late 2023.
On a per account basis, Regions Bank had the most overdraft fee revenues among large banks, $30 a year on average, and many families paid far more.
Overdraft revenues are no longer available for credit unions after the National Credit Union stopped requiring reporting of that data, but in 2024 Navy Federal Credit Union had $28 in overdraft fees per account, higher than all but one of the top 20 banks.
Notably, some national players charge no overdraft fees, including Capital One, Citibank, American Express, and Ally Bank, and none of the top 20 banks charges NSF fees.
The report notes that a relatively small percentage of customers often account for a large share of overdraft fees, with lower-income households disproportionately affected.
“With Congress and the Trump Administration reversing protection against abusive and unfair bank practices that multiply overdraft fees, some banks are seizing the opportunity to turn struggling families into a profit center,” said Lauren Saunders, senior attorney at the National Consumer Law Center.
Why consumers get hit
An overdraft occurs when a bank approves a transaction even though the account lacks sufficient funds. The bank covers the payment and then charges a fee, typically ranging from $30 to $40.
Consumer advocates argue that a $35 overdraft fee on a small purchase can amount to an annualized interest rate of several hundred percent if viewed as a short-term loan.
Banks contend that overdraft services help customers avoid bounced checks, declined transactions and other disruptions.
Affordability Watch
The resurgence of overdraft fees comes as many households continue to struggle with:
High credit-card balances.
Elevated interest rates.
Rising housing costs.
Persistent grocery and utility inflation.
Consumer advocates say overdraft charges often strike just before payday, creating a cycle in which repeated fees make it even harder for households to recover financially.
What consumers can do
Financial counselors recommend:
Opting out of debit-card overdraft programs when possible.
Setting low-balance alerts through online banking apps.
Linking savings accounts for overdraft protection.
Choosing institutions that offer grace periods or low-cost overdraft alternatives.
Reviewing account disclosures to understand when fees are charged.
Several online banks and credit unions have eliminated overdraft fees entirely, arguing that the charges are unnecessary and damage customer relationships.
What happens next?
NCLC is urging lawmakers and regulators to revisit overdraft reforms, including a cap on fees and a ban on NSF charges.
The debate is likely to continue as banks defend overdraft programs as a valuable service while consumer advocates characterize them as a costly penalty that falls most heavily on financially vulnerable households.