French Bank Overdrafts - Fact and Fiction

French Bank Overdrafts - Fact and Fiction

6th Nov 2025

Changes to the regulations on bank overdraft facilities appear to be more symbolic than substantive.

The transposition into French law of the European Directive (EU) 2023/2225 on consumer credit agreements, applicable from November 2026, has given rise to widespread speculation in the press and on social media.

Some reports have suggested that millions of people will lose access to overdrafts or that all overdraft authorisations will soon be subject to heavy new procedures. In reality, the changes are more limited than they appear.

The aim of the new directive is to update and harmonise consumer credit regulation across the European Union, with particular emphasis on transparency, information for borrowers, and proportionality of procedures.

French decrees implementing the new rules are still being prepared, but the general outlines are already clear.

The first clarification is simple: banks will continue to offer overdraft facilities. These are not disappearing, nor are they becoming systematically subject to complex authorisations for every use.

As before, an overdraft must be authorised by the bank in advance, based on the customer’s financial situation.

Once authorised, the customer can use it freely within the agreed limit, without needing fresh approval each time.

In other words, overdrafts remain a form of revolving credit tied to a current account, and the directive does not alter their everyday functioning.

The French Banking Federation (FBF) has stated that the idea that “automatic overdrafts” are ending is misleading. According to the FBF, “Such overdrafts have never been automatic: a bank has always had to agree to grant one.”

What the new directive does is reinforce the principle of proportionality — the bank must assess the customer’s creditworthiness before granting an overdraft, but this assessment may be simplified for small and short-term overdrafts.

The main change concerns very small overdrafts— under €200 and lasting less than one month. Previously, these were only partially covered by the consumer credit framework. From November 2026, they will formally fall under the directive’s scope. Overdrafts over €200 are already subject to consumer credit regulations.

Banks also have additional information obligations: clearer communication on costs, repayment terms, and rights. Banks will also need to perform a light credit check, proportionate to the size and duration of the overdraft. However, these changes are not expected to limit the availability of such facilities.

The FBF emphasises that existing overdraft authorisations will not be affected. “The goal is transparency, not restriction.”, say the FBF

France already has some of the strictest rules in Europe on overdrafts and consumer protection. Before the new directive, banks were already obliged to verify a customer’s ability to repay when granting an overdraft above €200 or for more than one month.

The new European framework essentially extends these principles to all overdrafts, but it does not create a new layer of control. In effect, for France the new directive is largely redundant.

The real challenge for banks will be to adapt their systems and documentation by late 2026, and the costs they will incur, rather than a transformation of how customers manage their accounts.

Related Reading:

• Guide to Banking in France