Many US retailers offer the option to get cash back when making a purchase with a bank debit card or prepaid card, saving consumers time by eliminating the need to make a stop at an ATM. This can also prevent consumers from having to pay higher out-of-network withdrawal fees if they are not near their own bank’s cash machines. Recent research has found that the average cost of out-of-network withdrawal fees is around $4.77, a record high. However, some stores may charge a fee for cash back services, especially for those living in areas with limited banking services.
A new analysis from the Consumer Financial Protection Bureau (CFPB) surveyed the policies of eight major retailers, including Dollar Tree, Dollar General, Kroger, Walgreens, CVS, Walmart, and Target. The CFPB found that three of these retailers charged a fee for their cash-back services: Dollar Tree, Dollar General, and Kroger. Across these retailers, consumers may pay an estimated $90 million annually in cash-back fees. Dollar Tree charges $1 for cash back at its Dollar Tree branded stores and $1.50 at its Family Dollar stores, while Dollar General charges between $1 and $2.50. Kroger has different fee tiers based on the withdrawal amount.
The CFPB does not regulate retailers but does have supervisory authority over financial service providers, including banks and credit unions. The agency’s cash-back fee survey was conducted with consideration for those who may have limited options for accessing their own money. The report highlighted concerns that economically vulnerable populations and those with limited banking access may be disproportionately impacted by these fees. Dollar stores, in particular, are prevalent in rural communities, low-income areas, and communities of color where banking access may be more challenging.
The analysis also found that retailers set fairly low limits on cash back amounts, potentially resulting in consumers having to pay multiple fees to access the cash they need. The fees charged by retailers, especially for withdrawal amounts under $50, may represent a significant percentage relative to the cash withdrawn. The CFPB will continue monitoring developments related to the fees consumers pay for accessing cash and the availability of affordable and convenient banking services throughout the country.
Overall, the cash-back fee analysis conducted by the CFPB sheds light on the impact of fees charged by retailers for cash-back services, particularly on economically vulnerable populations and communities with limited banking access. While retailers are not regulated by the CFPB, financial service providers such as banks and credit unions are subject to the agency’s oversight. Moving forward, the CFPB will continue to assess the fees consumers pay for accessing cash and the challenges faced by those living in areas with limited banking services.
