Does sexual orientation play a role in how we feel about our finances in the U.S? Does it impact how we think about banks, fees, and overdrafts? According to a new survey, it definitely does.
Research by personal finance advice blog OverdraftApps.com reveals that compared to the general population in the US, the LGBTQ+ community not only has more distrust in banks and other financial institutions, it also experiences more debt and averages a lower income.
“Wealthier people have access to resources that can help manage credit issues, such as financial planners,” Bob Annibale, global director of Citi Community Development and Inclusive Finance told CNBC. “Poor credit leaves people behind and it’s not part of an inclusive, growing society,”
Results from the survey show that individuals on lower incomes, without access to resources such as financial planning, find it much harder to build a good credit score, have fewer options for taking out credit, leading to them being charged much higher fees than you would usually expect.
The OverdraftApps.com survey reveals that the LGBTQ+ community go into their overdraft more frequently than the general population, overdrafting on average between three and nine times over a twelve month period. This is 50% more frequently than the general population (18% compared to 12%).
Taking out credit on a regular basis can be an indicator of poor financial planning. Overdrafts, payday loans and other short-term credit options are typically used to cover unexpected costs and emergencies.
When this type of short-term lending is used incorrectly (such as for essential, everyday spending), it could lead to consumers taking out more credit to cover the interest on their original loan, snowballing to leave consumers buried in unsecured debt.
The survey also found:
- The LGBTQ+ community has less trust in the system – 90% of the LGBTQ+ population don’t trust the current administration or Trump to help lower bank fees, compared to 76% of the general population.
- They are less likely to challenge an overdraft fee – While 58% of the general population has called to try to get their bank to reverse an overdraft fee; the LGBTQ+ community is slightly less likely to do so with 52% of the LGBTQ+ population having done this.
- The LGBTQ+ community is better informed – Interestingly, the LGBTQ+ community is more informed about overdrafting, 67% of the LGBTQ+ community surveyed were aware that they could opt out of overdrafting, while just 61% of the general population is aware.
- Less likely to enrol in overdraft protection – The LGBTQ+ community is 22% less likely to be enrolled into an overdraft protection program compared to the rest of the population (LGBTQ 32% vs General Population 39%)
The survey reveals that the LGBTQ+ community not only experience different challenges to the general population when it comes to finances, they also have slightly different priorities for spending, placing more emphasis on discretionary spending.
According to an Experian survey, experiences of financial institutions and laws may vary between the LGBTQ+ community and the general population due to homophobia, marriage inequality and higher taxes, which can all play a pivotal role in the LGBTQ+ communities attitudes towards money and managing their finances.
A significant number of the LGBTQ+ community say that discrimination has had an effect on their finances, with 62% telling Experian their sexual orientation or gender identity as a reason for financial challenges.
Understanding the impact that sexual orientation and gender have on finances can help break down the stereotypes of big spending and affluence and begin to address the issues of poverty in the LGBTQ+ community as well as discrimination within workplaces and financial institutions.
While in the U.S, things like marriage equality and anti-discrimination laws have improved the lives of the LGBTQ+ community there are still clear areas for improvement to help bring financial stability and equality.
The full infographic from OverdraftApps.com can be seen below.