Is There Really a $5 Overdraft Fee Cap?

No. There is no federal law capping overdraft fees at $5 in 2026. A rule that would have done exactly that was finalized by the Consumer Financial Protection Bureau in December 2024 — and then repealed by Congress before it ever took effect.

If you've seen a claim online that banks are now required to charge $5 or less per overdraft, or that you can file a federal complaint over a $35 overdraft fee, that claim is out of date at best and wrong at worst. Here's what actually happened, and what the real rules say today.

What the rule would have done

The CFPB's "Overdraft Lending: Very Large Financial Institutions" rule targeted banks and credit unions with more than $10 billion in assets — roughly the largest few hundred institutions in the country, covering a large share of U.S. checking accounts. For those institutions, the rule would have required one of three approaches to overdraft fees:

1. A flat $5 cap on the fee, calibrated to the CFPB's estimate of an institution's cost to cover a transaction, or
2. A cost-based cap set to the bank's own documented cost of providing the service, or
3. Treat overdraft coverage as a loan, with full Truth in Lending Act disclosures — an interest rate, a payment schedule, the works — the same way a credit card or personal loan is disclosed.

The rule was scheduled to take effect on October 1, 2025, per the CFPB's own description of the rule.

What happened to it

It never got there. Congress used the Congressional Review Act (CRA) — a law that lets a new Congress and president void a recently finalized federal regulation with a simple majority vote — to kill the rule first.

The timeline: the Senate passed the disapproval resolution, S.J.Res. 18, on a 54-48 vote on March 27, 2025. The House followed on April 9, 2025, 217-211. The President signed it on May 9, 2025 — nearly five months before the rule's own effective date. The enrolled text of S.J.Res. 18, on file with the U.S. Government Publishing Office, names its subject directly: a resolution disapproving "the rule submitted by the Bureau of Consumer Financial Protection relating to 'Overdraft Lending: Very Large Financial Institutions.'"

Under the CRA, a disapproved rule is treated as though it had never taken effect. The issuing agency is also barred by statute from issuing a new rule in "substantially the same form" without new authorization from Congress. The rule is dead, not paused — and you can confirm that directly: the CFPB's own page describing the original rule now carries an "archived content" banner.

What's actually true right now

With the cap rule void, the overdraft rule that currently applies is the one that was already on the books before it: Regulation E's opt-in requirement.

Under Regulation E § 1005.17, a bank cannot charge you an overdraft fee on an ATM withdrawal or a one-time debit card purchase unless you've affirmatively opted in to that coverage. If you haven't opted in, the transaction is simply declined at the register or the machine — no purchase, no fee. Per the CFPB's own overdraft options guidance, you can opt in, opt out, or revoke your opt-in at any time, and the bank has to give you a plain-English notice describing what you're agreeing to.

What Regulation E does not do is set a dollar limit on the fee itself. If you have opted into overdraft coverage, the bank can charge whatever fee is disclosed in its account agreement — and at plenty of banks, that's still in the $30-$35 range per overdraft, sometimes charged multiple times a day.

That said, "no federal cap" doesn't mean every bank charges the old amount. A meaningful number of banks — mostly large national banks and online-first banks — have voluntarily dropped overdraft fees to $0, or capped them well below historical levels, entirely on their own, independent of any federal requirement. That's a business decision each bank makes, not something you can count on across the industry.

What this means for you

Two things worth separating:

• Don't expect a federal $5 ceiling. If a bank charges you $34 for an overdraft, that's not illegal under any current federal fee-cap rule — because there isn't one.
• You still have the opt-in protection. If you'd rather have transactions decline than get hit with a fee, Regulation E gives you the right to turn overdraft coverage off for debit-card and ATM transactions, and the bank has to honor that.

Given there's no federal ceiling, the fee itself is entirely a function of which bank and which account you're in — which makes it a real point of comparison, not a settled baseline. Run your own numbers through our overdraft fee comparison calculator, and see our broader guide on checking account fees and how to avoid nearly all of them for the opt-out mechanics in more detail.

ClearValue Banking is an educational publisher and comparison resource — not a bank, and we don't hold deposits or set overdraft policy. If overdraft exposure is a real concern, it's worth comparing accounts against our published standard specifically on this feature rather than assuming your current bank matches whatever you last read online.