Interviewer Gives 20 Y.O. A Reality Check After She Jokes About Her $4k Credit Card Debt

Financial literacy isn’t just one of those things that happens by accident, we either learn it from someone in the know or we learn it the hard way, from an empty bank account. So it can be helpful to hear the stories of other’s mistakes to avoid them ourselves.

Financial advice blogger Caleb Hammer went viral on TikTok after interviewing a twenty-year-old who ended up thousands in debt after she didn’t understand the difference between credit limit and debt. We reached out to Caleb via email and will update the article when he gets back to us.
More info: TikTok

As much as money “runs the world,” many people tend to have no idea how to act when they get access to it. To this young woman’s credit, her first impulse was misguided generosity, although it’s worth noting that in this case, it’s not exactly her money. While it might seem ridiculous that the woman being interviewed believed that a credit limit is free money, research suggests that young people in general have the lowest financial literacy among all age cohorts.

Partially, this can be seen as a result of some social taboos around discussing money. While, contrary to the many memes out there, many schools do teach some about taxes and finances, this is all very abstract until the young adult has money in hand. How they spend it is often a reflection of what they have seen their parents do. Some parents spend a lot because they are financially stable, others are frugal, but without clear explanations of why they do what they do, their kids don’t exactly learn any new lessons.

However, generally, most adults don’t exactly discuss their financial decisions with their children and maintain a very different level of income. While it can be easy to mock someone for having no idea what a credit limit is, it might also be worth questioning why her parents gave her a credit card without actually explaining how it works.

A lack of financial literacy isn’t just some buzzword or abstract concept, it can often be measured in real-world impacts. For example, many young adults, like the woman in this clip, end up in debt that is realistically disproportionate to their income. The fact is that beyond simple misunderstandings about credit cards, there are predatory financial institutions that specifically offer “easy” loans to gullible folks who want an instant dose of retail therapy, leaving them in horrible debt for a long time. It’s not a scam if a willing and “informed” adult signed off on it.

Similarly, once a person is 18, they can gamble in most areas, something betting companies and casinos know very well. Technically, the odds are always “clear” but popular culture has often obfuscated just how intoxicating betting can be, leading people to throw their money away.

One example of this, at least in the US, are the ever-discussed student loans. People who would never qualify for a “normal” loan end up straddled with debt that they pay off for decades to come. There is a segment of society that still blames the loan-takers, but realistically, if we understand that statistically many of them don’t quite understand what they are getting into, can we truly hold them responsible?