Overdraft Protection Changed. Here's How to Opt Out.

On May 9, 2025, a law disapproving the Consumer Financial Protection Bureau's rule voided its $5 cap on large-bank overdraft fees, months before the cap's October 1, 2025 start date. For you, that means overdraft fees in 2026 are still whatever your bank sets, from $0 at Capital One and Citi to $34–$36 at Chase, Wells Fargo and U.S. Bank, and your main federal tool is still the Regulation E opt-out. Opting out stops overdraft fees only on ATM withdrawals and one-time debit card purchases, not on checks, ACH payments or recurring card charges.

Key takeaways

The CFPB's December 2024 overdraft rule for institutions with more than $10 billion in assets has "no force or effect" under Public Law 119-10, and the agency cannot reissue a substantially similar rule without new authority from Congress.
Under Regulation E, a bank may charge an overdraft fee on an ATM or one-time debit card transaction only if you opted in; you can revoke that consent at any time, and the bank must act on it as soon as reasonably practicable.
Checks, ACH debits and recurring debit card payments fall outside the opt-in rule. Whether you can switch off coverage for them depends on your account agreement: Wells Fargo lets customers remove it by phone or at a branch, while U.S. Bank says opt-out is not available.
As of October 2026, posted overdraft fees at large banks range from $0 (Capital One, Citi) to $10 (Bank of America, at most two a day) to $34–$36 (Chase, Wells Fargo, U.S. Bank), with cushions and grace periods that differ by bank.
California's state-licensed credit unions have been barred since January 1, 2026 from charging more than $14 per overdraft or NSF fee.

What it means for you

Chase, Wells Fargo or U.S. Bank customers ($34–$36 a fee): opting out stops fees on ATM and one-time debit card transactions, which are usually declined instead. Checks, ACH debits and recurring card charges can still be paid into overdraft with a fee; Wells Fargo lets you remove that coverage, U.S. Bank says you can't. Cushions and grace periods differ, as the big-bank table shows.
Bank of America, Capital One or Citi customers: an opt-out changes nothing you pay, because none of them charges an overdraft fee on ATM or one-time debit card transactions. At Bank of America, the $10 fee (at most two a day) can still apply to checks, ACH payments and recurring card charges.
People with recurring bills and ACH debits: the opt-out does not reach these. Ask your bank separately whether you can have them returned instead; the bank may charge a returned-item fee if its agreement allows, and the payee may charge its own fee. The worked example shows an opt-out cutting fees from $105 to $35 while the ACH fee remains.
California credit-union members: since January 1, 2026, state-licensed credit unions can charge no more than $14 per overdraft or NSF fee; federally chartered credit unions fall outside that cap. Your Regulation E opt-out rights are the same as at a bank.

The step-by-step section at the end covers how to opt out and what to confirm afterward.

What changed, and what did not

Several federal actions in 2025 and 2026 reversed or loosened earlier overdraft policy, while a few states moved the other way. The table lists each change with its date and its status as of October 2, 2026.

Date	Action	Status, October 2026
Dec 12, 2024	CFPB finalizes overdraft rule for banks and credit unions over $10 billion in assets: a $5 fee, a fee limited to costs and losses, or treatment as a loan with credit disclosures. Scheduled start: October 1, 2025.	Repealed; never took effect
Jan 14, 2025	CFPB withdraws its proposal to ban NSF fees on instantly declined transactions, such as declined debit card purchases and ATM withdrawals.	Withdrawn; no federal ban
Jan 22, 2025	New York's Department of Financial Services releases draft limits for New York-chartered banks, including no overdraft fees on overdrafts under $20 and no more than three overdraft or NSF fees per day.	Pre-proposal only; DFS asked banks for more data in September 2025; no formal or final rule located
Mar 3, 2025	NCUA stops publishing overdraft and NSF fee income for each credit union with more than $1 billion in assets, starting with the March 31, 2025 Call Report.	In effect
May 9, 2025	President signs S.J. Res. 18 (Public Law 119-10) disapproving the CFPB overdraft rule.	Law
Jan 1, 2026	California SB 1075 caps overdraft and NSF fees at state-licensed credit unions at $14, or any lower CFPB-set amount; per-fee notices have been required since January 1, 2025.	In effect
Apr 10, 2026	FDIC rescinds its 2023 guidance on multiple NSF fees for a re-presented item (FIL-14-2026).	In effect

The CFPB's December 2024 announcement described the three options and the October 1, 2025 start date. Public Law 119-10, approved May 9, 2025, says the rule "shall have no force or effect," and the CFPB's rule page confirms that the rest of Regulations E and Z is unchanged. Under the Congressional Review Act, a disapproved rule cannot be reissued "in substantially the same form" unless a later law authorizes it. Articles saying a $5 cap applies in 2026 are wrong.

The NSF proposal was pulled in a January 2025 withdrawal notice, which said the bureau might consider a broader rule. No such rule has been proposed. New York's January 2025 proposal would reach only New York-chartered banks, not national banks, and it has not been formally filed: a September 5, 2025 DFS industry letter calls it a pre-proposal and asks banks that commented to back up their claims with data on costs and revenues. California's SB 1075 covers credit unions examined by the state's Department of Financial Protection and Innovation; federally chartered credit unions fall outside it. The NCUA still collects the fee data during exams; it simply stopped publishing it credit union by credit union.

What opting out covers under Reg E

Regulation E, 12 CFR 1005.17, is the federal opt-in rule. It bars a bank or credit union from charging a fee for paying an ATM or one-time debit card transaction into overdraft unless it has given you a separate written notice, you have affirmatively opted in, and it has confirmed your consent in writing along with your right to revoke it. Consent lasts until you revoke it or the bank ends the service.

Revoking is what "opting out" means. You can do it at any time, using any method the bank offers for opting in, and the bank must carry out your revocation "as soon as reasonably practicable." The rule sets no fixed number of days, so a transaction that posts while your change is still processing may be handled under the old setting.

Three details narrow what an opt-out does:

Only two transaction types. The rule covers ATM withdrawals and one-time debit card purchases (in store, online or by phone) made with a card issued by, or on behalf of, the bank that holds the account. It does not cover checks, ACH debits or recurring debit card payments such as subscriptions.
The other coverage is a separate choice. A bank cannot make coverage of checks and ACH payments depend on your debit card opt-in, and it cannot refuse to pay them because you declined. Whether you can switch that coverage off is set by your account agreement, not by Regulation E.
A late-settling debit still can't carry a fee. The official interpretation of the rule says that if you have not opted in, the bank may not charge an overdraft fee on a debit card purchase it approved while you had enough money, even if your balance turns negative by the time the purchase settles.

What happens to a declined transaction

Once you have opted out, a debit card purchase or ATM withdrawal that would overdraw the account is usually declined on the spot. No federal rule bans a fee for that decline, because the CFPB withdrew its proposal. Wells Fargo and Bank of America say they charge no fee for declined or returned items, Citi says it charges no overdraft or returned-item fees, and Chase says a debit card purchase declined with Debit Card Coverage off carries no overdraft fee. U.S. Bank's overdraft page does not address declined-item fees, so check its fee schedule.

A check or ACH payment the bank refuses to cover is returned unpaid. The bank may charge a returned-item (NSF) fee if its agreement allows. The payee may also charge its own returned-payment fee and may send the item through again. The OCC's Bulletin 2023-12, which remains in place apart from reputation-risk wording removed on March 20, 2025, still warns that charging a new fee each time the same item comes back can be unfair. The FDIC, by contrast, withdrew its parallel guidance in FIL-14-2026, calling it "overly broad."

Coverage, transfers and NSF fees

Banks use "overdraft protection" for several different things, and an opt-out affects only one of them.

Feature	What it does	Typical cost	Affected by a Reg E opt-out?
Overdraft coverage (Reg E's "overdraft service")	The bank pays the transaction anyway and your balance goes negative	A flat fee per item, often with a daily cap	Yes, for ATM and one-time debit card transactions only
Linked-account transfer	Money moves from your savings or another account to cover the shortfall	Often free at large banks	No; it is excluded from Reg E's definition
Overdraft line of credit	A credit line or credit card advances money to cover the shortfall	Interest under the credit agreement	No; it is credit governed by Regulation Z
NSF or returned-item fee	The bank declines or returns the item rather than paying it	Zero at many large banks; varies elsewhere	No; the opt-out does not set this fee

The order matters at banks that offer both. Wells Fargo and Chase say a linked backup account is used first, whatever your debit card choice, so an opt-out stops fees without stopping transfers from your savings. If you want transactions declined when checking runs short, you have to unlink the backup account as well.

Big-bank overdraft terms, Oct 2026

The figures below come from each bank's own overdraft page, checked on October 2, 2026. Bank of America's come from its Personal Schedule of Fees effective August 7, 2026. They apply to standard consumer checking; some accounts, such as Chase Secure Banking and Wells Fargo Clear Access Banking, carry no overdraft fees at all.

Bank	Overdraft fee	Declined or returned items	Cushion or grace period	Checks and ACH coverage
Chase	$34; max 3 per business day ($102); none on items of $5 or less	No fee when a check or ACH is returned; a fee may apply if the item is presented again and paid	No fee if overdrawn by $50 or less at day's end, or brought back to that level by 11 p.m. ET the next business day	Discretionary under standard practice
Wells Fargo	$35; max 3 per business day	No fees for declined or returned transactions	Extra Day Grace Period: fees waived if the available balance is zero or positive by 11:59 p.m. ET the next business day	Can be removed by phone or at a branch
Bank of America	$10 per item; max 2 per day ($20); never charged on everyday non-recurring debit card or ATM transactions	No fee when an item is declined or returned unpaid; the payee may charge one	No fee on items of $1 or less, or that overdraw the account by $1 or less	Under the Standard Overdraft Setting, the bank either pays the item into overdraft or returns it unpaid; declined or returned with no fee under the Decline All Overdraft Setting, which SafeBalance accounts use automatically
U.S. Bank	$36; max 3 per day	Not stated on the overdraft page	No fee if overdrawn by $50 or less at day's end; above that, Overdraft Fee Forgiven reverses the fee if covered by 11 p.m. ET that day	Included; the bank says opt-out is not available
Capital One	$0 on consumer checking	Not stated on the page reviewed	Not applicable	Choose no-fee overdraft (requires $250 in deposits in 2 of the past 3 months) or auto-decline
Citi	$0	No returned item fees	Not applicable	Discretionary

At Bank of America, Capital One and Citi, a Regulation E opt-out does not change what you pay, because none of them charges an overdraft fee on ATM or one-time debit card transactions. Bank of America ended NSF fees and stopped letting customers overdraw at ATMs in February 2022, as set out in its January 2022 announcement. Its current fee schedule also says it does not charge the $10 fee on an ACH payment labeled "RETRY PYMT" or "REDEPCHECK," but a resubmitted payment without that label can draw a separate fee. Fees and cushions change, so check your own bank's current page or schedule before relying on any figure here.

Worked example: one short day

Illustrative example. A hypothetical bank charges $35 per overdraft, up to three a day, charges no NSF fees and offers no cushion. You start the day with $40 and three items post in this order: a $60 grocery purchase on your debit card, a $25 streaming subscription billed to the card each month, and a $120 utility payment by ACH.

Opted in to debit card coverage: all three are paid. Before fees, the balance goes to −$20, −$45 and then −$165, with a fee each time: 3 × $35 = $105 in fees and an ending balance of −$270.
Opted out: the grocery purchase is declined at the register, with no fee. The subscription is recurring, so the opt-out does not reach it; it posts and leaves $15. The ACH payment overdraws the account by $105 and draws one $35 fee, for an ending balance of −$140.
Opted out and standard coverage removed (possible at some banks): the grocery purchase is declined, the subscription posts, and the utility payment is returned unpaid. The bank charges $0, but the utility may add its own returned-payment fee and the bill is still due.

In this example, opting out cuts bank fees from $105 to $35, which is two-thirds lower, but it does not stop the fee caused by the ACH payment. A cushion changes the result again. Under Chase's published rules, an account left $105 overdrawn would avoid the $34 fee if the owner deposited $55 by 11 p.m. ET the next business day, bringing it to −$50.

Treating a flat fee as the cost of a short loan shows why it is expensive. One common conversion is:

Annualized cost (%) = fee ÷ amount overdrawn × 365 ÷ days until repaid × 100

Here, fee is the overdraft charge, amount overdrawn is the negative balance the fee paid for, and days until repaid is how long the balance stays negative. A $35 fee on a $105 overdraft repaid in 7 days works out to $35 ÷ $105 × 365 ÷ 7 × 100, or about 1,738% a year. This is a rough comparison, not a legally disclosed APR, and it shrinks as the overdraft grows or lasts longer.

Frequently asked questions

Will opting out or overdrafting hurt my credit score?

Banks and credit unions typically don't report checking account activity to the three major credit bureaus, according to the CFPB. An account closed with an unpaid negative balance is usually reported to checking account reporting companies such as ChexSystems and Early Warning Services, which can make it harder to open a new account. If the unpaid balance goes to a debt collector, the collector may report it to the credit bureaus, and that can affect your score.

If I opt out, can my joint account holder opt back in?

Yes. Under 12 CFR 1005.17(e), the bank must treat consent from any joint owner as consent for the whole account, and a revocation from any joint owner as revocation for the whole account. Because either owner's instruction applies to the whole account, the setting follows whichever instruction the bank carried out last, so co-owners should agree on it.

Can my bank give me worse account terms if I don't opt in?

No. Regulation E requires a bank to give customers who decline debit card overdraft coverage the same account terms, conditions and features it gives those who opt in, apart from the coverage itself. A bank cannot, for example, charge a higher monthly fee or withhold a feature because you declined.

Do the same rules apply at credit unions?

Yes. Regulation E defines "financial institution" to include credit unions, so the opt-in and revocation rights are the same. The repealed CFPB rule would also have reached credit unions with more than $10 billion in assets. Fee amounts, cushions and returned-item policies are set by each credit union's own account agreement.

Does opting out stop a merchant from charging me a fee?

No. A Reg E opt-out limits only your bank's overdraft fees on ATM and one-time debit card transactions. If a check or automatic payment is returned, the payee can charge its own returned-payment or late fee under its own terms, and Regulation E lets banks warn customers that "additional merchant fees may apply."

How to opt out, step by step

This is general information, not financial or legal advice; your account agreement and fee schedule determine what your bank can charge.

Check your current setting. In the app or online banking, look for the bank's name for the Reg E choice, such as Debit Card Coverage at Chase, Debit Card Overdraft Service at Wells Fargo, Overdraft Settings at Capital One (More Services, then Overdraft Settings) or Overdraft Coverage, found under Overdraft Solutions, at PNC. Your opt-in confirmation or account notice also shows it. At banks that never charge overdraft fees on these transactions, such as Bank of America, opting out does not change what you pay.
Revoke consent through any channel the bank offers. That usually means online banking, the app, a phone call or a branch. Wells Fargo also lets customers change the setting at its ATMs. Regulation E lets you revoke in any manner the bank accepts for opting in.
Ask separately about checks, ACH and recurring payments. If you also want those returned rather than paid into overdraft, ask whether the bank lets you remove standard coverage, and ask what returned-item fee applies, if any.
Decide about a backup account. Linking savings can cover a shortfall without an overdraft fee at many banks. If you want transactions declined instead, unlink it.
Get confirmation and note the timing. Save the confirmation screen or email. PNC, for example, processes the last selection it receives as of 10 p.m. ET each business day, before that night's posting; other banks set their own cutoffs, so ask when your change takes effect.
Turn on low-balance and overdraft alerts so you know before a recurring payment or ACH debit is due.
Check your next statement. If you see an overdraft fee on an ATM or one-time debit card transaction after your revocation took effect, dispute it with the bank in writing. If that fails, file a complaint with the CFPB.