For about four months, small business owners had a reason to relax about overdraft fees. A federal rule finalized in December 2024 would have capped what large banks could charge at $5 per overdraft, or forced them to price the fee at their actual cost of covering the transaction. It never took effect. Congress killed it before the October 2025 start date, and by mid-2026 banks had pulled in more than $12 billion in overdraft and non-sufficient-funds revenue in a single year — right back where things stood before the rule was even written.
If you run a small business and bank with one of the large institutions this rule would have covered, the fee schedule you're looking at today is the same one you had in 2024. That's not a technicality. A business that overdrafts even a few times a month is paying real money for something that, for a brief window, looked like it was going away for good.
What the Rule Would Have Done
The Consumer Financial Protection Bureau's overdraft rule targeted banks and credit unions with $10 billion or more in assets — think Chase, Bank of America, Wells Fargo, and similar large regional and national players. Under the rule, those institutions would have had to pick one of two paths: cap overdraft fees at a flat $5, or calculate and disclose the fee as a finance charge under existing lending law, tying the price to their actual cost of extending short-term credit. Either way, the days of a flat $34 or $35 charge regardless of the overdraft amount were numbered.
Community banks and credit unions under the $10 billion threshold were never covered by the rule, so this was always a large-bank story. But large banks hold a disproportionate share of small business checking accounts, which is why the repeal matters well beyond the biggest players.
How Congress Undid It
The rule died through the Congressional Review Act, a mechanism that lets Congress overturn a recently finalized federal regulation with a simple majority vote and the President's signature — no filibuster required. Lawmakers in the House and Senate introduced matching resolutions in February 2025. The Senate passed its version 52-48 on March 27, 2025. The House followed with a narrower 217-211 vote on April 9, 2025. President Trump signed the resolution on May 9, 2025, several months before the rule was ever scheduled to take effect.
The Congressional Review Act carries a provision that makes this repeal unusually durable: once a rule is struck down this way, the same agency cannot issue a new rule that is "substantially the same" without new authorization from Congress. That means the CFPB can't simply rewrite the overdraft cap in a slightly different form and try again. Barring new legislation, the flat-fee overdraft model at large banks is likely to stay in place for years.
What Overdraft Fees Actually Cost a Business Today
With the cap gone, fee schedules vary widely by bank, and the gap between the cheapest and most expensive options is large enough to matter for a business managing tight cash flow:
- Bank of America: around $10 per overdraft
- Chase: around $34 per overdraft
- Wells Fargo: around $35 per overdraft
- U.S. Bank: around $36 per overdraft
The average overdraft fee across the industry sits at roughly $27, and most large banks cap the number of fees they'll charge per day — typically three to four. Do the math on a business that overdrafts a handful of times a month: three overdrafts monthly at $35 each adds up to $1,260 a year, money that does nothing for the business except sit in a bank's fee revenue line.
Smaller overdrafts sting the most in relative terms. A $12 shortfall that triggers a $35 fee is an effective finance charge north of 290% for the few days until the account gets covered — far worse than even the most predatory short-term credit product, which is exactly the pricing gap the now-defunct rule was built to address.
States Are Trying to Fill the Gap — Unevenly
With the federal cap gone, a handful of states are attempting to regulate overdraft and NSF fees on their own, though the protection is patchy and depends entirely on where your bank is chartered. New York's Department of Financial Services has proposed rules for state-chartered banks that would prohibit overdraft fees on shortfalls under $20, cap fees at the actual overdrawn amount, limit institutions to three overdraft or NSF fees per account per day, and ban charging a fee twice for the same declined transaction when a merchant resubmits it. California's Attorney General has separately warned state-chartered banks and credit unions that aggressive overdraft and returned-deposit fee practices may violate the state's unfair competition law.
The catch for business owners: these are state-chartered bank rules, not blanket protections that follow you regardless of which bank you use. Large national banks — Chase, Bank of America, Wells Fargo — are federally chartered and largely outside the reach of state banking regulators on this specific issue. If your business account sits at a national bank, a New York or California rule likely won't touch your fee schedule at all. If you bank locally or regionally with a state-chartered institution, it's worth checking whether your state has moved on this, since the protection can vary from a hard fee cap to nothing at all.
What You Can Actually Do About It (Since the Cap Isn't Coming)
You can't wait on federal policy to fix this. What you can control is your own exposure.
Know your bank's specific policy. Overdraft rules vary enormously even within a single bank's product lineup, from whether transactions are covered at all, to how large a negative balance is tolerated before a fee triggers, to how long you have to bring the account positive before the charge posts. Several large banks now offer a same-day or next-business-day grace period — Chase Overdraft Assist, Wells Fargo's Extra Day Grace, PNC Low Cash Mode, and similar programs at other banks will waive the fee if you cover the shortfall before the deadline. If you don't know whether your bank offers one of these, that's a five-minute phone call worth making.
Set balance alerts and check them. Nearly every bank now supports low-balance text or push notifications. A threshold alert at, say, $500 above your typical daily float gives you a buffer to move money before a scheduled payment or debit card swipe pushes the account negative.
Consider a bank built around avoiding the fee entirely, not just discounting it. A growing set of business-focused fintech accounts — Novo, Relay, and others — advertise no overdraft fees as a core feature, either by declining transactions that would overdraw the account or by structuring things so there's simply no fee path. That's a meaningfully different model than a large bank's grace-period patch, and worth evaluating if overdrafts are a recurring problem rather than a rare accident.
Link a backup source of funds instead of relying on the bank's default overdraft coverage. A linked savings account, a business line of credit, or even a business credit card with a grace period can cover a shortfall for a fraction of what a standard overdraft fee costs. A $5,000 draw on a business line of credit at a 12% rate for a few days costs a few dollars in interest — not $35 or more per incident.
Build a cash cushion sized to your actual volatility, not a round number. The right buffer isn't "$1,000 because it sounds safe" — it's sized to your typical swing between when money goes out (payroll, rent, supplier payments) and when it comes in (customer payments, receivables). Businesses with lumpy receivables need a bigger buffer than those with predictable subscription revenue.
The Real Fix Is Seeing the Shortfall Before It Happens
Almost every overdraft traces back to the same root cause: a business owner didn't have a clear, current picture of what was about to leave the account. An automatic vendor payment fires on a day the owner forgot about. A recurring software subscription renews the same week as a big supplier invoice. A check clears three days later than expected. None of these are surprises in hindsight — they're just gaps in visibility at the moment they mattered.
That's ultimately a bookkeeping problem, not just a banking one. If your books are current, categorized, and reconciled against your actual bank balance on a rolling basis, upcoming obligations stop being surprises. If your records live in a spreadsheet that gets updated once a month, or in a system you don't fully trust, you're flying blind between statements — exactly the condition that produces a $35 overdraft on a $12 shortfall.
Keep Your Cash Flow Visible Year-Round
Overdraft fees are usually a symptom of financial records that lag behind reality. Beancount.io offers plain-text accounting that's transparent, version-controlled, and easy to reconcile against your actual bank balance in real time, so you can see a cash crunch coming days before it becomes a fee. Get started for free and see why developers and finance-minded business owners are switching to plain-text accounting. If you want a visual dashboard on top of your ledger, Fava gives you exactly that, and our docs walk through setting up the kind of running reconciliation that keeps a shortfall from ever becoming a surprise.