Overdraft Fees Cost Consumers $12.4B as Banks Raise Charges

Be careful with that checking account balance. Higher overdraft fees may be on the way. How high are the fees? The National Consumer Law Center (NCLC) estimates consumers paid about $12.4 billion in overdraft and NSF fees in 2025.

But first, a little history. A 2024 CFPB rule would have capped overdraft fees for banks and credit unions with $10 billion or more in assets at either $5 or an alternative price tied to institutional costs. This cap would have saved consumers an estimated $5 billion. 

The rule was to take effect in October 2025 but the U.S. Congress overturned the rule through the passage of a bill that President Trump signed into law. The Trump Administration has also reversed enforcement actions and guidance against overdraft and NSF fee practices.

Overdraft fees are typically around $35 and they have played a significant part of non-interest bank income for the past 40 years. Some banks have begun increasing overdraft fees or overdraft-fee revenue, according to NCLC research that looked at the 2025 overdraft fee revenue of the 20 largest consumer banks.

Seen as a Profit Center for Banks

“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. 

“While Washington turns its back on people struggling with the affordability crisis, state leaders must seize the opportunity to push back against predatory overdraft fee practices.” 

"Some banks are seizing the opportunity to turn struggling families into a profit center." — Lauren Saunders, National Consumer Law Center

About 25% of consumers live in households that pay overdraft fees each year. These fees fall disproportionately on Black households, people with lower incomes, and people with limited education, according to NCLC.

Research on Overdraft Fees

Here is a closer look at the NCLC research on overdraft fees. JPMorgan Chase and Wells Fargo each charged about $1 billion per year in overdraft fees in 2025. PNC Bank, a much smaller bank, charged $279 million in overdraft fees.

Banks with large increases in overdraft fee revenue include USAA Federal Savings Bank, Huntington Bank, M&T Bank, Citizens Bank, First Citizens, and TD Bank.  

Smaller banks such as Woodforest Bank, First Convenience Bank, and Arvest Bank also stood out as charging high overdraft fees, according to NCLC research.

Positive Aspects of the Research

There is some good news to report. Some national banks charge no overdraft fees, including Capital One, Citibank, American Express, and Ally Bank, and none of the top 20 banks charge NSF fees.

Truist Bank had a 10% drop in overdraft fees since 2023. 

BMO Bank saw its overdraft revenue drop from $27 million in 2023 to $2 million in 2025 after reducing its overdraft fee from $36 to $15. But in 2026 the bank moved in the opposite direction, increasing its overdraft fee to $20 and reducing the overdraft cushion that does not trigger a fee from $50 to $20.

Urging State Action

NCLC wants states to limit overdraft fees and NSF fees for the banks and credit unions chartered in their states. States can do this by limiting overdraft fees to $5 and prohibiting NSF fees.

Another strategy is to allow banks and credit unions to collect no more than six overdraft fees per year or fees totaling no more than $200 per year. 

Other reforms states can make include prohibiting overdraft fees on debit card and ATM transactions, prohibiting multiple fees for a single negative balance episode, and requiring a $50 cushion for small overdrafts and a 24-hour grace period before charging a fee.

How to Avoid Overdraft Fees

Here are some tips for avoiding overdraft fees from the American Bankers Association. 

Sign up for direct deposit with your paycheck. This is the fastest way to get your work pay into your bank account. Keep track of balances, transactions, and accounts set up for automatic payments. Check your bank balance online, by phone, by app, and at the ATM.

Keep a cushion of money in your bank account, enough to cover bills and more just in case you need it. Link a checking account to an overdraft line of credit, savings account, or credit card.

Ask a bank to notify you by text or email when a bank balance drops below a certain level. That way you’ll know when it’s time to put more money in your account.