Almost a Quarter of LGBTQIA+ People Don't Have a Bank Account. Here's What to Do if You're One of Them

Pride Month is a time to celebrate the lesbian, gay, bisexual, and transgender community. It's also a good moment to put the spotlight on some of the challenges LGBTQIA+ people face all year round. For example, according to one study, 23% of LGBTQIA+ adults do not have a checking or savings account. This can be costly and make it harder to build solid financial foundations.

The LGBTQI+ Economic and Financial (LEAF) survey polled over 2,500 adults in the U.S. Almost a quarter of the respondents were unbanked and 11% said they'd experienced discrimination when using financial services. That's much higher than the average American. According to the FDIC, 4.5% of U.S. households are unbanked.

Costs of being unbanked

Bank accounts make it easier to manage your money. If you don't have one, it can be harder -- and often more costly -- to get things done. For example, you might wind up using a check-cashing service to get your paycheck, or a money order to pay bills. You'll spend money on those services that could be used for other things. Almost half the LEAF survey respondents say they are unable to pay their monthly bills in full.

A money order will set you back around $2 per transaction, depending on the amount and where you buy it. Cashing a check can set you back $3 to $10. There are other options, such as digital wallets or prepaid debit cards, but almost all of them will charge fees for transactions that would be free with a decent checking account.

It can also make it harder to borrow money if you need it. The FDIC points out that unbanked households disproportionately use alternative credit sources such as payday loans, pawn shops, or auto title loans. To put it another way, people who don't have access to traditional banking services get pushed outside the system, often into the arms of predatory lenders.

How to open a bank account

There are lots of reasons people might not have a bank account. It might be that you don't trust the banking system, or worry you don't have enough money to meet minimum deposit requirements. If you've had financial setbacks that lead to unpaid overdraft fees or other banking issues, you could be denied a bank account.

The first step in opening a bank account is to find one that's right for you. If you're worried about fees or high minimum deposits, check out our list of free checking accounts. Look for an account with FDIC insurance and useful services, such as an ATM network or mobile app. Think about the types of services you might use and use that as a starting point to compare accounts.

If you're worried about discrimination, a desire to avoid the system is understandable. Even more so if you've had bad experiences in the past. Look for an LGBTQIA+-friendly bank with solid anti-discrimination policies. Some banks make it easy to put your chosen name on your bank card, while others actively support LGBTQIA+ employees and causes.

If you've had trouble getting approved for a bank account previously, it could be that you have a low ChexSystems score. This is similar to a credit score and records things like bounced checks or unpaid balances on bank accounts. You can request a copy of your ChexSystems report to see what might be causing a problem. It's worth looking into something called second-chance checking accounts, which can help to build a positive banking history.

Bottom line

The percentage of LGBTQIA+ respondents who don't have a bank account is shocking and reflects a significant barrier to building financial stability. If you don't have a bank account, there are more and more banks and credit unions with inclusive policies to choose from. Check out our guide on how to open a bank account to learn about what steps to take.