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In our association, only black belts can award rank - even stripes. We have none in house. So that means the only time anyone is promoted is during the black belt seminars which cost $150 for two days.
The seminars themselves are worth it. But it seems a little much. Especially when the promotions that do happen are based partially on the advice of the junior instructors from within the club. There is no formal test.
I know two guys who have been no-stripe white belts for well over a year. One of them just cannot afford it. The other misses the seminars because he's in the air force.
That is one of the few times where it is acceptable to pay. But if your instructor is able to promote you but decides for you to pay, I would be worried. Also, if the price increases with each belt, I would run!