France to reclassify bank overdrafts as consumer credit

Starting November 20, 2026, France will implement new regulations regarding bank overdrafts following a European directive aimed at harmonizing consumer credit standards. Under these rules, overdrafts exceeding 200 euros will be classified as consumer credit.

Previously, many overdrafts were granted almost automatically. Moving forward, banks will be required to conduct a formal solvency assessment for any request exceeding the 200-euro threshold. This analysis will include reviewing a client's income, monthly expenses, existing debts, and payment history to ensure they can repay the amount. Banks must also provide clear documentation regarding the total cost of the overdraft, including the annual percentage rate (TAEG).

The reform aims to protect consumers and reduce the risk of over-indebtedness. However, the change has raised concerns among banking representatives and social observers. The Fédération bancaire française noted that the analysis must remain proportionate to the amount and duration. Some industry leaders have expressed concern that stricter controls could place low-income households and families—who frequently rely on overdrafts to manage end-of-month expenses—in significant financial difficulty.