The CFPB’s proposal to cap overdraft fees for financial institutions $10 billion in assets or larger could have a major impact on credit unions of all sizes by creating competitive market pressures to reduce or remove fees. America’s Credit Unions issued a Regulatory Comment Tuesday, including a rule summary, potential impact, and key points and questions for credit unions to consider.
Credit union feedback is requested via the linked survey to help shape the discussions and ensure comment letters thoroughly address concerns; comments are due to America’s Credit Unions March 15 and to the CFPB April 1.
The proposed rule would apply to credit unions with at least $10 billion in assets, however credit unions with less than $10 billion in assets will likely be affected by the rule’s changes to the marketplace. Additionally, the CFPB has not ruled out future rulemaking to include smaller institutions, and the proposed rule could renew interest in overdraft regulation by other federal agencies.
It would take effect October 2025, and provide three options for covered financial institutions:
- treat overdrafts as extensions of credit, which would require Regulation Z disclosures with each overdraft;
- charge a “breakeven” amount that allows the credit union to only recoup the cost of providing the overdraft; or
- charge the safe harbor amount that the CFPB establishes.
America’s Credit Unions strongly opposes efforts to limit the availability of overdraft services and previously wrote to the CFPB that overdraft fees are not junk fees, disclosures are clear, and overdraft services are understood and requested by consumers.
While credit unions in that asset range received the Regulatory Comment directly, the information and survey link are available to all member credit unions with a member login for legacy CUNA members here and legacy NAFCU members here.