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Key Takeaways
- Discount chain stores such as Family Dollar and Dollar General have begun charging customers for getting cash back on their purchases when they pay with a debit card.
- Dollar stores typically charge fees, while chains including Walmart and Target allow customers to take cash out for free, the Consumer Financial Protection Bureau found.
- The government watchdog agency is concerned that customers are being exploited by businesses that cater to lower-income shoppers.
If a dollar store is your best (or only) option for tapping your bank account for cash, you’re probably paying more to access your money than customers at other major retailers.
That’s according to a report released this week by the Consumer Financial Protection Bureau (CFPB), the government’s consumer watchdog agency. Customers at dollar stores such as Dollar General (DG), Dollar Tree (DLTR), and Family Dollar paid anywhere from $1 to $2.50 per transaction to get cash back at the register, depending on the amount of cash back requested.
By comparison, customers at Walmart (WMT), Target (TGT), Walgreens (WBA), CVS (CVS), and Albertsons (ACI) stores could get cash back for free. The bureau used secret shoppers to survey cash-back fees charged by eight major retailers.
Because dollar stores tend to be disproportionately located in rural areas, isolated towns, and communities of color, residents of those areas were the most likely to pay the higher fees. That’s especially important because those same areas are less likely to have bank locations.
CFPB Monitoring Retailers’ Cash-Back Practices
The financial regulator said it was monitoring retail store cash-back practices, as bank branch closures have left more people relying on registers to access their money.
“While retail chains had long provided cash back on debit card purchases for free, the CFPB has found that dollar store chains and other retailers are now charging fees for access to cash,” CFPB Director Rohit Chopra said. “Many people living in small towns no longer have access to a local bank where they can withdraw money from their account for free. This has created the competitive conditions for retailers to charge fees for cash back.”