Large US banks will have to cap overdraft fees at $5 — or an amount that covers their costs and losses — under a new consumer protection rule that’s been vigorously opposed by industry and Republicans.

The Consumer Financial Protection Bureau is closing a loophole that it says allowed big banks to profit heavily from overdraft fees. A new rule targets ban

In a final rule to be released Thursday, the Consumer Financial Protection Bureau would allow banks to either charge $5 for overdraft fees or another amount commensurate with costs. Banks could also charge more if they disclose the fees' annual percentage rate of interest to customers.

The U.S. watchdog agency for consumer finance on Thursday adopted new regulations capping the amount banks can charge for overdrafts, saying the rule would save depositors $5 billion annually.

Big banks will now have to put a limit of $5 on overdraft fees, the Consumer Financial Protection Bureau said. The consumer finance watchdog's new rule could save customers $5 billion annually, and was part of the campaign against junk fees by the Biden administration.