Share story

WASHINGTON — Need to refinance your mortgage? Just put it on your shopping list next time you visit Costco, alongside the jumbo paper towels and the 6-gallon bucket of cat kibble.

Big-box retail stores offer a growing number of financial services, from check cashing and reloadable prepaid cards to small-business loans and life insurance.

The products appeal to consumers attracted to the convenience of one-stop shopping and fed up with the overdraft fees, tight credit and minimum balances at banks. But retailers aren’t subject to the same federal oversight as banks, and they might not always provide the same consumer protections.

Some 10 million American households — 1 in 12 — have no checking or savings accounts, according to a 2011 survey by the Federal Deposit Insurance Corp. About 24 million households — 1 in 5 — have accounts but also rely on alternative financial services such as nonbank money orders, check cashing, payday loans, tax-refund loans and pawnshops.

Major retailers are developing an ever-expanding menu of financial products aimed at this population, a market that generates more than $78 billion annually in fee and interest revenue.

In addition to mortgages, for example, Costco advertises identity protection and boat and RV loans, as well as auto, home and health insurance.

At Home Depot, customers may get home-improvement loans for up to $40,000.

Wal-Mart, the nation’s largest retailer, offers tax preparation, check cashing, in-store bill paying, money transfers and prepaid cards that function as debit and checking alternatives.

Through a partnership with American Express, Wal-Mart’s reloadable Bluebird card allows direct deposits and pre-authorized check writing; has no monthly, annual or overdraft fees; and may carry a balance of up to $100,000.

Last month, Wal-Mart announced that Bluebird accounts would be eligible for FDIC insurance, enabling deposits of government payments such as Social Security, military pay and tax refunds.

Wal-Mart’s latest experiment is insurance. About 200 Wal-Mart Stores in Georgia and South Carolina are testing sales of life-insurance policies. Customers at participating stores may purchase prepaid cards at the stores that may be used to pay for one-year terms. The customers then activate the policies by calling a toll-free number and speaking with licensed MetLife agents.

Retailers’ interest in financial products isn’t new, dating back decades to store credit and, later, branded credit cards. Wal-Mart even sought a special charter to establish its own bank, but the company withdrew its application in 2007 after facing resistance from the banking industry and lawmakers.

Bankers consider big-box stores competitors, however, and they want retailers that offer financial services to be supervised and examined by the same federal regulators that oversee banks.

Consumer advocates say expanding financial services to people who might not otherwise have access to bank accounts or credit might be a positive trend, although they’re concerned about the lack of legal safeguards.

People who fail to read the fine print might find themselves paying high fees and shelling out extra money for fraud prevention or customer-service calls, or to check balances, said Pamela Banks, a senior policy counsel for financial services at Consumers Union, a nonprofit advocacy organization.

Of special concern are prepaid cards. Issuers don’t have to disclose fees, and if cards are stolen or lost, federal regulations don’t guarantee that cardholders will get their money back. Some issuers provide fraud protection, fee disclosures, dispute-resolution rights and FDIC insurance even though they aren’t required by law.