Most of us think of cash back at the register as the free way to get cash. You’re buying milk anyway, you hit “yes” on the little screen, pick $20, and walk out with a bill in your pocket and no ATM fee. At a lot of stores that’s exactly how it works. At some of the biggest chains in the country, though, that $20 quietly costs you $1, $1.50, or more.
Those small charges add up to real money. When the Consumer Financial Protection Bureau looked into it, the agency estimated that three retail companies collect more than $90 million a year in cash-back fees. If you’re the kind of person who grabs $20 here and $20 there at the register, a slice of that $90 million might be yours.
What the Stores Actually Charge
The CFPB’s Issue Spotlight on cash-back fees sampled eight national retail chains. Three of them charged fees and five didn’t.
Dollar General charged between $1 and $2.50 depending on how much cash you asked for. Dollar Tree stores charged $1, and its Family Dollar stores charged $1.50. Kroger brands, including Kroger itself and Ralph’s, charged 50 cents for up to $100 and $3.50 for larger amounts up to $300. Harris Teeter, another Kroger brand, charged 75 cents for $100 or less.
The five that offered cash back for free were Albertsons, CVS, Walgreens, Target, and Walmart. One caveat: that snapshot is from the CFPB’s 2024 review, and store policies can change without much fanfare. Read the screen before you tap “yes.” Most terminals show the fee if there is one, but it’s easy to miss when there’s a line behind you.
Why a $1.50 Fee Is Worse Than It Looks
A buck and a half doesn’t sound like much until you compare it to the cash you’re getting. Cash-back amounts are usually small and preset. The CFPB found that retail cash withdrawals had an average size of $34 and a median of just $20. Many terminals cap you somewhere between $5 and $50.
So run the numbers on a typical withdrawal. A $1.50 fee on $20 is 7.5% of your own money. A $1 fee on $10 is 10%. If you’d never accept a savings account that charged you 7.5% to take money out, you shouldn’t accept it at the register either.
Small caps also push people into repeat withdrawals. Say you grab $20 at a Family Dollar twice a week. At $1.50 each time, that’s $3 a week, or $156 a year, just to access cash that was already sitting in your checking account. That’s a utility bill. Possibly two.
Meanwhile, the CFPB estimated that the extra cost to a merchant for processing a cash-back transaction runs from about a penny to roughly 20 cents. In its examples, the added cost for $10 of cash back was 5 cents at a discount chain and 1 cent at a grocery store. Stores also benefit from handing out cash, because it means less cash sitting in the drawer that they have to count, transport, and deposit. The fee is mostly profit.
How This Compares to ATM Fees
To be fair, some checkout fees are cheaper than the alternative. ATM fees are at record highs. Bankrate’s most recent Checking Account and ATM Fee Study put the average total cost of an out-of-network ATM withdrawal at $4.86. That’s a $3.22 surcharge from the ATM owner plus a $1.64 fee from your own bank. In Atlanta, the priciest metro in the survey, the average was $5.37.
So if your only options are a $4.86 ATM or Kroger’s 50-cent fee on $100, Kroger wins easily. That’s half a percent. The trouble is with the small-dollar, high-fee combinations at dollar stores, where you’re paying a dollar or more on $10 or $20.
The CFPB also pointed out who gets hit hardest. Dollar stores are often in small rural towns and lower-income neighborhoods, places that also tend to have fewer bank branches. If the closest place to get cash is a dollar store, you’re stuck paying whatever they charge. That’s a big reason the issue matters even if the dollar amounts look tiny.
Seven Ways to Get Cash Without Paying for It
The simplest fix is to shift your cash-back habit to a store that doesn’t charge. If you already shop at Walmart, Target, CVS, or Walgreens, take your cash there. Pick a larger amount less often instead of $20 every few days, since even free cash back works better when you’re not making extra trips.
Second, learn your bank’s ATM network. Many banks belong to surcharge-free networks like Allpoint or MoneyPass, and Bankrate found that in 39% of cases, banks or specific accounts don’t charge their own customers for out-of-network withdrawals at all. Your bank’s app almost always has an ATM locator. Spend two minutes with it and figure out which machines near your home and work are free.
Third, look at banks that reimburse ATM fees. A number of online banks and some brokerage checking accounts refund surcharges from other banks’ machines, sometimes up to a monthly cap and sometimes without limit. If you rely on cash and don’t live near your bank’s ATMs, this feature can be worth more than a slightly higher savings rate.
Fourth, if you have a credit union account, check whether it’s part of a shared branch or CO-OP ATM network. Credit unions often let members use thousands of other credit unions’ machines for free.
Fifth, plan your cash needs. A lot of fee-paying happens on the fly: you need $20 for a school fundraiser tomorrow, so you grab it wherever you are. If you know you’ll need cash for the week, pull it all at once from a free source.
Sixth, ask whether you need cash at all. Plenty of situations that used to be cash-only now accept a card or a payment app. Babysitters, farmers market stalls, and the kids’ team snack fund often take Venmo or Zelle. Just stick to people you know when using payment apps, since those transfers are hard to reverse.
Seventh, keep a small cash cushion at home so you’re not caught short. Even $40 or $60 tucked in a drawer can save you from paying a fee for an emergency $20.
If Cash Is How You Budget
Some people use cash on purpose, with envelopes or a cash-only grocery budget, because spending paper money feels more real. That’s a smart habit, and fees shouldn’t ruin it. If you budget this way, make one planned withdrawal per pay period from a free ATM or a no-fee cash-back store instead of topping up as you go. You’ll keep your system intact and skip the nickel-and-diming.
It also helps to hold your cash budget money in a checking account with no monthly fee and solid ATM access, and to park everything else in a high-yield savings account at the same bank or a linked one. That way the money you aren’t spending is earning something, and the money you are spending costs nothing to reach.
The Bottom Line on Checkout Fees
Cash back at the register can be the cheapest way to get cash or a surprisingly expensive one, depending entirely on where you’re standing. The CFPB found fees of $1 to $2.50 at dollar stores and tiered fees at Kroger brands, while Walmart, Target, CVS, Walgreens, and Albertsons charged nothing when the bureau checked. A fee that takes 7.5% of a $20 withdrawal is one of the worst deals in everyday banking.
Look at the screen before you confirm, know which ATMs are free for you, and batch your withdrawals. None of that takes much effort, and if you’ve been paying $1.50 twice a week, it puts about $150 a year back in your pocket.
