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ARTICLE · 06 FEBRUARY 2025

New York Proposes Limits On Overdraft And NSF Fees

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On January 23, 2025 the New York Department of Financial Services (NYDFS) announced proposed regulations to curb overdraft fees and insufficient funds fees charged by banks in New York.

United StatesFinance and Banking
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
Maxwell Earp-Thomas
Maxwell Earp-Thomas
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On January 23, 2025 the New York Department of Financial Services (NYDFS) announced proposed regulations to curb overdraft fees and insufficient funds fees charged by banks in New York. The proposed rules aim to protect consumers from what the NYDFS describes as "exploitative and deceptive banking fees."

The proposed regulations would impose new limitations on a range of overdraft and NSF fee practices. Broadly, this includes restrictions on fees for small transactions, requirements for customer notification, and stricter transaction processing rules. Specifically, the proposed regulations include the following requirements:

  • Elimination of Overdraft Fees for Small Transactions. The proposed regulations would prohibit New York-chartered banks from charging overdraft fees on overdraft transactions of less than $20 or if the overdrawn amount is less than the fee itself.

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