The U.S. Senate voted on Wednesday to let banks charge customers higher overdraft fees if they do not have enough money in their accounts. The bill was led by Sen. Tim Scott (R-S.C.).
It aims to overturn a rule made by the Consumer Financial Protection Bureau (CFPB) during the Biden administration. The CFPB rule was set to start in October. It was made to limit high overdraft fees, which can be as much as $35.
The Senate’s vote was done through a Congressional Review Act (CRA) resolution. This means the decision is final and cannot be filibustered. The resolution passed with a close 52-47 vote.
Sen. Elizabeth Warren (D-Mass.) strongly opposed the resolution.
Senate approves higher overdraft fees
She said the CFPB rule was important to reduce the financial burden of overdraft fees. These fees often affect low-income Americans the most. Warren said the rule could save American families up to $5 billion each year.
“Many commercial banks play a game of gotcha by stacking customers’ transactions in a way that maximizes overdraft fees,” Warren said. She noted that overdraft fees often cost low-income families more than $400 a year. This is a lot of money that could pay for a mortgage, important medication, or several weeks of groceries.
“Republicans say they care about lowering costs,” Warren continued. “But overturning this rule will make big banks richer and hard-working families poorer.”
The bill now goes to the House. If it passes, it will need the signature of President Donald to become law.
The debate has started a wider discussion about consumer protection and financial fairness. Critics accuse the GOP of siding with big banks at the expense of everyday Americans. As this legislative battle continues, millions of American families wonder how the changes will affect their financial stability.
