The U.S. government is gearing up to tackle surprise overdraft fees at banks as soon as next month, according to a report from Bloomberg. The Consumer Financial Protection Bureau claims that banks have garnered roughly $8.5 billion from insufficient fund and low-balance fees in 2021, and the agency has reportedly been developing regulations for the past few months to crack down on the issue.

The effort is part of the Biden administration’s crackdown on “junk fees,” an initiative the president announced in October. The effort aims to eliminate surprise fees that consumers often face while purchasing concert and airline tickets, food takeout orders, and more, which cost consumers tens of billions of dollars yearly.

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“Folks are tired of being taken advantage of and being played for suckers,” said President Joe Biden in remarks at the White House on Oct. 11.

Banks usually charge overdraft fees when a payment or withdrawal from a bank account is larger than the available balance. Fees can range from around $30 to $35, which can put a burden on consumers financially. 

After facing immense pressure from consumers, financial regulators and the government regarding overdraft fees, banks have recently been pulling back from charging them. Last year, banks collected roughly $9.9 billion in overdraft fees, a 6% decrease from what it collected in 2021, which was $10.6 billion, according to a recent Financial Health Network survey.

The survey also reveals that banks have modified their overdraft policies for the past two years. Financial institutions have been “reducing the size of the fee charged, lowering the cap on the maximum number of fees per day, instituting a grace period, or increasing the minimum negative balance amount to incur a fee.” It even states that some have even removed overdraft fees altogether.

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