Formerly, financial literacy meant knowing when to pay bills and when to save money meaning the financial universe for most people was manageable because the choices were few, but in the digital age, and even before, the choices presented to the basic consumer when money is concerned is vastly larger and more complicated. The richer groups pass financial literacy down as a matter of course, but people that do not deal in large sums, tend to not have the appropriate literacy when their financial situation improves, and this lack of financial literacy causes them to sink almost equally as fast in most cases. The problem is that the traps present themselves at the point in which most people are just leaving home and have to decide how to finance college, and avoid predatory lending practices in credit cards and other areas.

In the nineties, unsuspecting freshmen college students were set upon by the predatory lending of credit cards. This was a precursor in lending to the massive housing fraud scheme that practically wrecked the world’s economy. These large esteemed credit card companies relaxed their usually stringent decades old lending criteria to give credit cards and sometimes with large amounts to students just leaving home, without any financial history, jobs and most importantly, no financial literacy. Those that had financial literacy immediately recognized the trap that was being set very obviously before them. Those without financial literacy experienced defaults and poor financial and credit statuses almost immediately, and some destroyed their potential financial futures for years to come in a single action of accepting a credit card or multiple credit cards that in most cases actually were too good to be true. Those that learned their lesson, gained financial literacy, and recovered were much less likely to be defrauded in the worldwide housing scheme to follow. This scheme just so happened to follow this same relaxed lending practices path.

Financial literacy also allows people to avoid obvious scams like these in general. These scams would seem ludicrous to some, but very simple scams snag financially illiterate people all of the time. As the digital age progresses, this problem has increased tenfold, and because many of the scams are targeted toward the elderly, it shows that the need for financial literacy can be necessary at any age. However, the only real protection against scams is vigilance. Many scams are directed at those that are not vigilant, and some of these scams have been perpetrated by some of the largest corporations in the world. Companies that range from very large electrical companies to very large phone companies would add small irrelevant fees to bills unnoticed to customers.

Individually, these amounts did not raise any attention, but the nefarious tactics gained these manipulative companies millions of dollars each month. The same scams are perpetrated by the smartest credit card and information thieves. These thieves will only debit an account in unnoticeable amount. Victims with many transactions that do not review their statements would miss the small amounts taken, but this allows the scammers to scam a victim for many years and sometimes indefinitely in some cases.