The Beginning of the End for Overdraft Fees

Key Regulator Signals Path to Reform

Andy Spears
3 min readDec 9, 2021


At a speech to the Consumer Federation of America this week, acting Comptroller of the Treasury Michael Hsu outlined some key reforms his agency sees as necessary when it comes to banking — particularly around overdraft fees.

The speech comes as Capital One announced an end to the practice of collecting overdraft fees. Additionally, as American Banker reports, JPMorgan Chase is making some key changes to its overdraft fee policies:

JPMorgan Chase announced a pair of changes that figure to impact its overdraft-fee revenue. Starting next year, the largest U.S. bank by assets will give customers an extra business day to avoid overdraft fees and will make direct-deposited payroll funds available up to two business days early.

Hsu named several key reforms he sees as necessary in the area of overdrafts:

The list includes: providing a grace period before charging an overdraft fee; allowing negative balances without triggering fees; offering balance-related alerts; and providing real-time balance information.

While some of these reforms are in place at some banks, they are not yet industry-wide. Hsu’s remarks come following an indication by the Consumer Financial Protection Bureau (CFPB) that additional regulation around overdraft fees is in the pipeline.

“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” said CFPB Director Rohit Chopra. “We will be taking action to restore meaningful competition to this market.”

The signals of action on overdraft fees have been applauded by key consumer advocacy groups.

“Capital One’s complete elimination of all overdraft and NSF fees is a game changer that should set the standard for the entire banking industry and encourage the CFPB to stop overdraft fees from being used as a high-cost form of credit that can reach or exceed the cost of triple-digit payday loans,” said Lauren Saunders, associate director of the National Consumer Law Center. “Capital One is the first top-10 bank, the first with a real branch network, and the first with significant overdraft revenue to make the hard choice to eliminate overdraft and NSF fees that harm the most vulnerable consumers and push them out of the banking system.”

Candace Archer of Americans for Financial Reform indicated that her organization believes serious action is required:

We appreciate the work of the CFPB on drawing attention to the harms of overdraft fees, which take billions of dollars a year out of the pockets of mostly low- and moderate-income households to pad the bottom lines of the country’s big and small banks. And among those households, Black and Latinx households were also far more likely to incur overdrafts. We urge the CFPB to use all the tools that Congress gave it to protect consumers from abuses, including drafting tough new regulations.

Photo by Alex Motoc on Unsplash



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .