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ARTICLE · 27 DECEMBER 2024

CFPB Finalizes Rule On Overdraft Credit – What Financial Institutions Need To Know

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On December 12, the Consumer Financial Protection Bureau (CFPB) finalized a rule (Rule) designed to reshape the regulatory framework for overdraft credit provided by very large financial institutions.

United StatesFinance and Banking
Benjamin Saul
Benjamin Saul
Andrew Owens
Andrew Owens
Tarrian Ellis
Tarrian Ellis

On December 12, the Consumer Financial Protection Bureau (CFPB) finalized a rule (Rule) designed to reshape the regulatory framework for overdraft credit provided by very large financial institutions.1 This highly anticipated Rule amends Regulations E and Z, bringing overdraft programs more in line with traditional consumer credit products under the Truth in Lending Act (TILA). The Rule seeks to enhance consumer protections, particularly for financially vulnerable populations, while holding large institutions accountable for fee practices that have long been a source of regulatory scrutiny.

Key Takeaways

1. Expanded Coverage for Overdraft Credit

    • The Rule closes long-standing exceptions in Regulation Z, making overdraft credit offered by very large financial institutions (those with assets exceeding $10 billion) subject to TILA requirements if fees exceed cost recovery thresholds.

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