In a closely contested 52-48 vote, the U.S. Senate has repealed a Consumer Financial Protection Bureau (CFPB) rule that sought to cap overdraft fees at $5 for large banks. The decision, passed largely along party lines, now moves to the House of Representatives for consideration. The CFPB regulation, finalized in December 2024 under the Biden administration, was set to take effect later this year and was projected to save American consumers $5 billion annually.

The CFPB’s rule aimed to protect consumers from excessive fees by limiting overdraft charges to $5 per transaction for banks with assets exceeding $10 billion. It also required banks to either justify higher fees based on actual processing costs or treat overdraft fees as loans under the Truth in Lending Act. Currently, most banks charge an average of $35 per overdraft event. The CFPB estimated that the rule would save households paying overdraft fees an average of $225 annually.

However, Senate Republicans argued that the rule imposed unnecessary government price controls and could lead banks to reduce or eliminate overdraft protection services altogether.

Consumer advocates have criticized the repeal as a setback for working-class families already struggling with inflation and rising costs. 

Senator Josh Hawley (R-MO) was the sole Republican to oppose the repeal, aligning with Democrats in defense of the CFPB’s rule. Hawley argued that maintaining the cap would save working-class families significant amounts annually. 

The resolution now heads to the House of Representatives, where Republicans hold a slim majority. If passed there, it will require President Donald Trump’s signature to become law. The Congressional Review Act mechanism used for this repeal also prevents future administrations from introducing similar regulations without congressional approval.