WASHINGTON — Overdraft fees, credit card teaser rates and more came under renewed scrutiny during a Senate Banking Committee hearing Tuesday on affordability, with lawmakers from both parties debating whether banks are unfairly burdening consumers with fees that critics say disproportionately affect working Americans.
Sen. Bernie Moreno, an Ohio Republican, sharply criticized banking practices that he said can trigger overdraft charges when customer deposits are posted after withdrawals, according to Banking Dive.
“Most banks, for example, in Ohio, that receive deposits — those deposits don’t credit the person’s account until after withdrawals happen, and a lot of that results in overdraft fees,” Moreno said during the hearing, Banking Dive reported.
‘Crushing Working Americans’
Moreno directed his comments to Lindsey Johnson, president and CEO of the Consumer Bankers Association, warning that banks could face legislative action if they do not voluntarily change the practice.
“That’s something that you guys can either do voluntarily or you’re going to make us pass a law to do that, because it’s crushing working Americans and it’s fundamentally unfair,” Moreno said.
When Johnson began discussing banks’ back-end technology systems, Moreno interrupted, saying, “Just do it the right way, though. It’s just bad practice. Just don’t do bad things.”
The hearing focused broadly on affordability concerns and the financial pressures facing American households as lawmakers examined the impact of fees, inflation and consumer debt.
$35-Plus Cup of Coffee
Sen. Chris Van Hollen, a Maryland Democrat, said consumers paid roughly $12 billion in overdraft fees last year, citing figures that mirror estimates recently released by the National Consumer Law Center.
“You can go and get a cup of coffee and not realize that your three-buck cup of coffee ended up getting you a $35 overdraft fee,” Van Hollen said, noting that the effective annualized cost of some overdraft charges can exceed 16%.
CFPB Efforts Highlighted
Banking Dive further reported that Van Hollen also highlighted efforts by the Consumer Financial Protection Bureau to curb overdraft fees. The CFPB finalized a rule in 2024 that would have capped most overdraft fees at $5, but the measure was overturned after President Donald Trump signed a congressional resolution repealing the rule in May 2025.
Julie Margetta Morgan, president of The Century Foundation and a former CFPB official, told lawmakers that eliminating the overdraft rule has cost consumers approximately $5 billion.
According to Banking Dive, Morgan argued that overdraft fees have evolved from an occasional courtesy service into a significant source of bank revenue.
“Banks will frame overdraft fees as something that’s necessary to provide a service, but overdraft actually used to be a courtesy to bank customers, and it’s turned into a profit center for the banks,” Morgan said.
States Urged to Act
As the CU Daily has reported, the National Consumer Law Center recently urged states to pursue their own overdraft reforms, citing data showing overdraft revenue at the nation’s 20 largest banks increased 4.2% in 2025 compared with 2023. The group said some institutions reported even larger increases.
Some Pushback
Not all lawmakers agreed with the criticism of overdraft fees.
Sen. Thom Tillis defended banks’ ability to charge overdraft fees and argued that consumers also bear responsibility for managing their accounts.
“Last time I checked, a lot of the banks still give you one or two passes,” Tillis said, according to Banking Dive. “But when it becomes a chronic problem, at what point are you expected to actually know how much is in your bank account before you write a check? That’s what this is, it’s nothing more than that; it’s financial literacy.”
Criticism of Card offers
Moreno also criticized another common banking practice: promotional 0% credit card offers that later transition to higher, compounding interest rates, according to Banking Dive.
“Nothing has crushed working Americans more” than such offers, Moreno said, cautioning banks against promoting them as consumer-friendly products.
