There is a new rule limiting bank overdraft fees. What do you know?

the Consumer Financial Protection Bureau (CFPB) It said it closed a loophole in overdraft fees – limiting the ability of banks to charge them and potentially saving households hundreds of dollars.

The “legacy” loophole exempted overdraft fees as finance charges, the regulator said. The final rule, announced Thursday, makes several major updates to federal regulations governing overdraft fees for financial institutions with more than $10 billion in assets.

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Now, the bank will either be able to charge $5 for an overdraft, just a fraction of what consumers typically charge, or cap the fee so that it covers no more than the lender’s costs.

Banks will still be able to continue charging higher fees as long as they comply with longstanding lending laws, including disclosing any applicable interest rate.

Typically, financial institutions charge $35 for an overdraft loan despite the fact that the CFPB says the majority of consumers’ debit card overdrafts are less than $26 and are paid off within three days.

The CFPB said this new rule is expected to generate $5 billion in annual overdraft fee savings for consumers, or About $225 per family Who pays the overdraft fees.

“For too long, big banks have exploited a legal loophole that has drained billions of dollars from American deposit accounts,” CFPB Director Rohit Chopra said, adding that the regulator “requires big banks to be vocal about the interest rates they adopt.” “Reimposing fees on overdraft loans.”

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According to the CFPB, Overdraft loans are profitable Not only did it cost consumers billions of dollars, it also prevented tens of millions from accessing banking services. Consumers also faced negative credit reports, preventing them from opening another account in the future.

Overdraft fees were not always considered profit drivers, but rather “courtesy services offered by a bank, for example, when a paper check sent in the mail arrives late.”