COURTESY

You spent more than was in the account. The bank covered it. Then it took thirty-five dollars.

Thirty-five dollars, to cover a check you were short on. If a lender did that on paper and called it a loan, the law would make it print a number: the finance charge, the annual rate, the cost of the credit in plain figures on a page you could hold. That is what the Truth in Lending Act is for. It does not cap what a lender can charge. It makes the lender say it out loud.

Your bank never said it out loud, and it never had to. To the law, what your bank did for you was not a loan.

It was a courtesy.

Black households report overdrafting at nearly twice the rate of white households. The government knows. It wrote that down too, in the same rule, and we will get to the page it is printed on.

The exception

The word is not a metaphor. It is a legal term, and it has a birthday.

When the Federal Reserve Board first wrote Regulation Z in 1969, it carved out an exception. Truth in Lending defines a finance charge as any cost you pay for the use of credit. The Board excepted from that definition any charge for honoring a check that overdrew your account, unless the bank and the customer had agreed to the arrangement in writing beforehand.

Read what that exception was protecting, in the government’s own words: overdraft credit “started as a courtesy that individuals within financial institutions provided when they would decide on an ad hoc basis to pay particular check transactions into overdraft rather than returning those checks unpaid.”

Individuals. Ad hoc. A person, at a desk, looking at your check.

That was the thing. A teller deciding one check at a time to cover you rather than send it back stamped. It saved you a bounced-check fee, a merchant fee, and a humiliation. It was a favor. Favors do not come with an annual percentage rate.

That hole in the regulation is fifty-seven years old, and it is the same size it always was.

What the courtesy became

The teller is gone.

Banks do not decide your overdraft one check at a time anymore. The CFPB’s rule says so plainly: institutions “generally make pay/no-pay decisions in advance,” setting overdraft limits “that the consumer may not be aware of,” running the decision through software before you ever swipe.

So the bank has decided, before you walk into the store, where the line is. It does not tell you the number. It lets you cross the line it drew, and then it charges you thirty-five dollars for crossing it.

Most very large financial institutions, the rule says, continue to charge exactly that: thirty-five dollars a transaction, every transaction. It is, in the rule’s words, “still a source of billions of dollars in profits every year.”

The government has a phrase for the distance between a teller covering your check and a system engineered to let you overdraw: “a significant departure from the historical courtesy model.”

The favor became a product. The product became a revenue line. And the word stayed exactly where it was, because the word is the only thing keeping a thirty-five dollar charge from being a finance charge that has to be disclosed.

The test

In December 2024, the CFPB tried something that was almost gentle. It did not ban overdraft. It did not cap the fee.

It said: you can keep the word. You just have to mean it.

The rule’s operative sentence: Regulation Z would apply to overdraft credit at very large institutions “unless it is provided at or below costs and losses as a true courtesy to consumers.”

Charge what it actually costs you to cover the check, and it stays a courtesy, and you disclose nothing. Charge thirty-five dollars to front somebody a few days of groceries, and it is credit, and you print the number like every other lender in the country.

Who was named

The rule also wrote down who had been paying, in a single sentence in its own text:

“Black households and Latino households are more likely to incur overdraft fees than white households.”

The footnote carries the numbers. Twenty-six percent of Black households reported an overdraft, against fourteen percent of white households: one and nine-tenths times as likely. The Bureau’s own December 2023 report put it another way, finding Black consumers sixty-nine percent more likely to live in a household charged an overdraft or insufficient-funds fee.

That is the government, in the rule, naming the people the exception was collecting from. It did not have to. It wrote it down anyway, and it is still there, printed, in the Federal Register, at page 106773.

The repeal

Congress killed the rule on May 9, 2025. The rule had been published December 30, 2024.

The instrument was the Congressional Review Act, and the language of Public Law 119-10 is not complicated:

“That Congress disapproves the final rule submitted by the Bureau of Consumer Financial Protection relating to ‘Overdraft Lending: Very Large Financial Institutions’ (89 Fed. Reg. 106768 (December 30, 2024)), and such rule shall have no force or effect.”

No force. No effect. The test was withdrawn before the word ever had to sit for it.

So the exception stands, exactly as the Federal Reserve wrote it in 1969, for a kindness that no longer exists.

At most of the biggest banks the fee was thirty-five dollars, the rule found. Black households were, by the rule’s own footnote, one and nine-tenths times as likely to report an overdraft.

Correction

Corrected 2026-10-17. This casefile published on July 26, 2026. A reading against the rule’s printed text found four errors, named here rather than quietly repaired. The argument that the word “courtesy” is what keeps the fee from being disclosed stands.

The wrong page. The casefile said the sentence naming who pays is printed “at page 106768.” Page 106768 is the first page of the rule. The sentence, “Black households and Latino households are more likely to incur overdraft fees than white households,” prints on page 106773, with footnote 64. The line now reads page 106773. The other citations of 106768 cite the rule as a whole and stand.

Households that reported an overdraft, not households that paid the fee. The casefile said “Black households pay that fee at nearly twice the rate of white households” and “Black households are still one and nine-tenths times as likely to pay it.” Footnote 64 reports something narrower: “26 percent of Black, 23 percent of Latinx, and 14 percent of White households reported having overdrafted, making Black and Latinx households 1.9 and 1.6 times as likely as White households, respectively, to have overdrafted.” It cites a Financial Health Network brief of 2023, and it adds a later figure of 31 percent of Black households against 14 percent of white households, in 2023. Neither shows who pays the fee today. The sentences now read “Black households report overdrafting at nearly twice the rate of white households” and “Black households were, by the rule’s own footnote, one and nine-tenths times as likely to report an overdraft.”

Who charges the fee. The casefile said “Most large banks still charge exactly that.” The rule says “most very large financial institutions continue to charge $35 per overdraft transaction today,” as of its publication on December 30, 2024. The line now reads “Most very large financial institutions, the rule says, continue to charge exactly that.”

A regulation, not a statute. The casefile called the overdraft exception “That hole in the statute” and said “the Board wrote the law so this one would not need one.” The exception is a regulation. The rule says “The Board used its delegated authority to create a regulatory exception from the definition of finance charge for certain overdraft fees.” It also says the Board’s 1969 issuance “neither discussed policy rationales nor interpretation of statutory text,” so the casefile’s account of the Board’s purpose has no source. The first phrase now reads “That hole in the regulation,” and the clause about the Board’s purpose is cut. The excerpt carried the same claim, “In 1969 the Federal Reserve wrote a kindness into the law”; it now reads “In 1969 the Federal Reserve wrote an exception into its regulation,” and its last words, “the kindness costs thirty-five dollars,” now read “the courtesy costs thirty-five dollars.”

Source: Consumer Financial Protection Bureau, “Overdraft Lending: Very Large Financial Institutions,” Final Rule, 89 Fed. Reg. 106768 (December 30, 2024), at 106768, 106773 (footnote 64) and 106782 (footnote 126). Read on October 17, 2026.

Corrected 2026-10-18. Two sentences in the close are named here rather than quietly repaired.

The fee, as the rule found it. The close said “The fee is still thirty-five dollars.” That states today’s fee. The source is the rule’s finding, as of its publication on December 30, 2024, that “most very large financial institutions continue to charge $35 per overdraft transaction today.” The line now reads “At most of the biggest banks the fee was thirty-five dollars, the rule found.”

The last sentence. The close ended “And the law still calls it a favor.” The 1969 exception is a regulation, as the note of October 17 records, and the sentence restated the claim that note corrected. It is cut. The line before it already says the exception stands, exactly as the Federal Reserve wrote it in 1969.

Source: Consumer Financial Protection Bureau, “Overdraft Lending: Very Large Financial Institutions,” Final Rule, 89 Fed. Reg. 106768 (December 30, 2024), at 106769. Read on October 18, 2026.