Overdraft fees are still a poverty tax. Banks that cover a debit when the money is not there often charge around $35 for the privilege. The CFPB’s 2023 market monitoring put the median overdraft fee, among large banks and credit unions still charging one, at $35. Congress then used the Congressional Review Act in 2025 to kill a CFPB rule that would have capped many large-institution overdraft fees or forced them to be treated more like credit. The cap is gone. The $35 knock is not.
The Alternative Daily take: this is not a clumsy courtesy. It is a product. It is sold to the people with the least slack in the account, often more than once a day, on transactions that could have been declined for free.
How overdraft fees actually land on a household
You swipe for groceries. The account is short. The bank pays the grocer and pays itself. A $4 shortfall becomes a $35 fee, and if two small charges post the same afternoon you can collect the fee twice. CFPB research has long found that a relatively small group of heavy overdrafters pays a large share of the fees. That is the definition of a poverty tax: the people closest to zero pay the penalty for being close to zero.
Some banks cut or renamed the fee after years of enforcement pressure. Some still charge in the $30 to $37 range. “Overdraft protection” from a linked savings account or a line of credit can be cheaper than $35 a pop, or it can be another product with its own fine print. Read it. “Protection” is a sales word.
What you can still do about overdraft fees
You can opt out of debit-card overdraft on one-time point-of-sale and ATM transactions. Then the card declines instead of feeding the fee machine. That is embarrassing at a checkout. It is cheaper than $35. Keep opt-in only if you have a specific reason and a buffer, not because a teller checked the box in 2012.
- Turn on low-balance alerts at a number that is still above zero, not at $5 after the damage.
- Link a savings account for true overdraft transfer if the transfer fee is low or zero. Know the fee first.
- Ask whether your bank still charges NSF fees on declined items. Many large institutions dropped them. If yours did not, that is a reason to move.
- Time automatic bills for the day after payday, not the day before.
- If fees already posted, ask for a one-time courtesy refund. Then change the setting so you are not asking again next month.
Credit unions and some online banks are less addicted to this line item. Switching is a chore. It is also how you stop donating a week’s groceries to a fee schedule.
Overdraft fees and the health-household squeeze
These fees hit on the same weeks as a copay, a prescription pickup, and a slightly too-small grocery run. That is not a coincidence. Thin accounts and high deductibles live in the same houses. A $35 overdraft on a pharmacy debit is a medical bill by another name.
If your employer still pays on a prepaid card or a payday-week cycle that does not match your bills, ask HR whether direct deposit to a credit union is an option. Timing mismatches are how overdraft becomes a habit instead of a one-off. A free checking account with no overdraft “service” is a health intervention for a thin week.
Keep a written list of what posted last time you were hit. Two $6 charges and a $35 fee each is the kind of math you remember better on paper than in a banking app that hides yesterday.
Congress took the cap off the table. You can still take the product off your card. Opt out of one-time debit overdraft, keep a small cash buffer, and treat every overdraft fee as a bill you can cancel. The bank will survive. Your grocery week might too.
