Journal / Essay

The Math of the Overdraft

The borrowed-time piece in this journal covered credit card debt. This is a smaller number per instance, and a much larger one in aggregate — and it has the unusual distinction, among everything in this journal, of having had an actual fix, briefly, on the books.

And Then You're Dead · August 2026 · 6 min read

Overdraft fees are charged when an account goes negative, typically $20 to $35 per transaction, regardless of whether the shortfall was five dollars or five hundred. They're one of the more concentrated forms of financial cost in this journal — most people never pay one, and a small share of people pay a lot of them.

The Rule That Almost Fixed It

In December 2024, the Consumer Financial Protection Bureau finalized a rule capping most overdraft fees at large banks at $5, unless a bank could document that a higher fee reflected its actual costs.

The rule was projected to cut bank overdraft revenue by nearly $5 billion a year — money that would have stayed in the accounts of the households paying it instead.

The Reversal

The rule never took effect. Congress used the Congressional Review Act to overturn it within months of it being finalized.

The Senate voted to repeal the overdraft rule on March 27, 2025. The House followed on April 9. The President signed the repeal on May 9 — five months after the rule was finalized, and before it ever applied to a single overdraft.

Because the repeal went through the Congressional Review Act, the law doesn't just kill this specific rule — it bars the CFPB from issuing any future rule "substantially the same" without new authorization from Congress. The $5 cap isn't paused. It's foreclosed.

What Got Collected Instead

With the cap gone, 2025 played out the way the pre-rule years had.

The average fee in 2025 was $26.77 — roughly five times the amount the repealed rule would have permitted. The cost is not spread evenly: the fees fall disproportionately on Black households, lower-income households, and households with volatile income, and a small share of frequent overdrafters generates a large majority of total fee revenue.

And Then You're Dead

This journal is mostly a record of costs nobody designed and nobody can point to as a specific decision. This one is different — a specific agency wrote a specific rule, calculated a specific dollar amount it would save specific households, and a specific vote in Congress, followed by a specific signature, made sure none of it happened. The $12 billion collected in 2025 isn't an accident. It's the amount a $5 cap was written to prevent. That's the plan. That's the math.

That's it. That's the whole thing.

Read about credit card debt · or see every essay