The data: Overdraft fee income at several of the largest US banks rose in the first nine months of 2025 year-to-year, according to an American Banker analysis of Federal Financial Institutions Examination Council (FFIEC) call reports. JPMorgan Chase, the largest, reported $815 million in overdraft fee revenue.

Trendpotting: Starting in 2021, banks ostensibly under threat from neobanks offering low to no fees reduced or cut nonsufficient fund (NSF) and overdraft fees. And some rapidly introduced grace periods for repaying overdrafts. At least 10 large banks jumped on the bandwagon:

• TD Bank and Regions Bank introduced checking accounts that charge a small maintenance fee rather than overdraft fees.
• Capital One stopped charging overdraft or NSF fees. Accounts did not charge maintenance fees.
• Chase increased its overdraft allowance, eliminated an NSF fee, and introduced a grace period for overdraft repayment.

Zoom out: The Consumer Financial Protection Bureau’s (CFPB) final rule on overdraft fees, in December 2024, requires financial institutions with more than $10 billion in assets to charge an overdraft fee that covers only their costs and losses or cap the fee at $5. It was scheduled to go into effect in December 2025 but was canceled in May under the Congressional Review Act. This action was in line with a spirited brief from the American Bankers Association that argued the CFPB rule was harmful to consumers and extralegal.

Our take: It’s debatable whether overdraft fees are usury or a customer convenience; the banking industry and the Biden CFPB fell on opposite sides of the argument. The conclusion hinges on the moral case for short-term credit and associated costs or profits for financial institutions (FIs).

If the argument is that customers are paying with intention for least-cost short-term credit, the case for overdraft fees at market rate is strong. If their FI is overcharging for desperate situations, it’s a different story.