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 pay that fee 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, and the Board wrote the law so this one would not need one.

That hole in the statute 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 large banks still 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 106768.

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.

The fee is still thirty-five dollars. Black households are still one and nine-tenths times as likely to pay it. And the law still calls it a favor.