I asked ChatGPT for financial advice. Here’s how it went.

ChatGPT has taken the world by storm since OpenAI released it to the public in November 2022. Today, people use it for literally everything — from planning their trips around the globe and debugging code to creating dinner recipes, scripting social media posts and customizing cover letters. But how reliable and accurate is ChatGPT when it comes to providing financial advice? And should you trust this AI chatbot to help you make high-stake money decisions? 

According to the Survey of Consumer Finances, 46% of American households accumulated credit card debt in 2022. So I decided to put the AI chatbot to the test: Could it help me create a practical plan to tackle credit card debt? Here’s the scenario I plugged into the AI chatbot: 

‘”I want to pay off $16,260 in credit card debt across three credit cards in 12 months. The first card has a $4,505 balance with a 17% APR. The second card has a $9,529 balance with a 19% APR, and the third card has a $2,226 balance with an 18% APR. Can you help me create a debt payoff plan?”

In under a second, ChatGPT responded with a pretty straightforward answer: 

“Here’s a step-by-step, 12-month debt payoff plan based on your balances and interest rates. I’ll prioritize the debt avalanche method, where you focus on paying off the card with the highest interest rate first while making minimum payments on the others. This method saves you the most money on interest.”

Step 1: Calculate monthly minimum payments

Assume minimum payments are about 2% of each card’s balance:

• Card 1: $4,505 × 2% = $90.10
• Card 2: $9,529 × 2% = $190.58
• Card 3: $2,226 × 2% = $44.52

Step 2: Determine total monthly payment

To pay off $16,260 in 12 months, you need to pay around $1,500 per month ($16,260 ÷ 12). This amount will cover minimum payments plus additional payments toward the debt.

Step 3: Focus on high-interest debt first

• Card 2 (19% APR, $9,529 balance): Pay as much as possible after minimum payments.
• Card 3 (18% APR, $2,226 balance): Once Card 2 is paid off, focus on this card.
• Card 1 (17% APR, $4,505 balance): Pay off last.

Step 4: Allocate payments

Here’s how to break down your $1,500 monthly payment:

Month 1-8: Focus on Card 2

• Card 2: Pay $1,184.80 ($1,500 – $325.20 minimum payments).
• Card 1 & Card 3: Continue minimum payments ($90.10 + $44.52).

After 8 months, Card 2 will be paid off (approx. $9,529 + interest).

Month 9-10: Focus on Card 3

• Card 3: Pay $1,365.38 ($1,500 – $134.62 minimum for Card 1).
• Card 1: Continue minimum payment ($90.10).

After 2 months, Card 3 will be paid off (approx. $2,226 + interest).

Month 11-12: Focus on Card 1

• Card 1: Pay $1,500/month.

Card 1 will be fully paid off by the end of month 12.

The verdict

ChatGPT did a pretty decent job generating a debt repayment plan. However, it may only work for someone who’s making enough money each month to comfortably pay their minimum payments and allocate extra cash toward repayment. For a more tailored plan, you’ll have to fine-tune your prompts and provide specific details about your financial situation — and it might take a few tries and some back-and-forth to get it right. 

Where ChatGPT falls short is in explaining the math behind its calculations. For instance, in the example above, the chatbot suggested paying $1,500 per month to pay off $16,260 in 12 months, even though $16,260 divided by 12 months is actually $1,355 per month. It was only when I asked to clarify the discrepancy that it provided a more detailed breakdown:

Final adjusted calculation:

• Total debt: $16,260
• Total interest: ~$739
• Total to pay: $16,260 + $739 = $17,000 (approximately).
• Monthly payment: $17,000/12=$1,416
• By rounding up to $1,500/month, you’ll ensure the debt is paid off even if there are slight variations in interest accrual.

This shows one of ChatGPT’s limitations: Though it’s a helpful tool, you’ll have to play around with it and double check the calculations since its explanations aren’t always clear at first. And ChatGPT can make mistakes, so you have to be extra careful when it comes to financial planning since a tiny error could lead to costly decisions that steer you away from your goals. If you aren’t familiar with personal finance and all its jargon, it’s best to consult a professional. 

Where ChatGPT shines and where it doesn’t

Since ChatGPT is trained on large amounts of existing data and information, such as text, images, audio or video, it doesn’t have access to real-time market updates and current regulations. In other words, it’s unreliable for investment advice or decisions that depend on up-to-the-minute information. 

Even for more general financial topics like retirement planning, the advice can be oversimplified or, in some cases, inaccurate. That’s why Steven Kibbel, a certified financial planner and senior editor at InternationalMoneyTransfer.com, believes that while ChatGPT is a helpful guide for general concepts, it’s not a replacement for professional financial advice.

“Financial planning isn’t just about crunching numbers; it’s about understanding the human side of money. Your emotional relationship with saving, your dreams for the future, and your tolerance for risk all play a role.” Kibbel said. At least for now, ChatGPT just isn’t equipped to offer holistic and personalized money advice that accounts for these deeply personal factors.

Instead, ChatGPT is better for basic research. “For example, If you want to learn the difference between a Roth IRA and a traditional IRA, it can explain it in plain English,” he said. “It’s also useful for learning about budgeting methods, financial planning basics or broad investment principles.”

Is AI the answer to your money problems?

Well, yes and no. 

“You can ask ChatGPT basic questions, learn from it, and treat it as a helpful assistant,” Kibbel said. “But when it’s time to make serious decisions with your money, I suggest leaning on the expertise of a professional who can look you in the eye, ask the right questions and give you advice tailored just for you.”

For example, if you’re struggling to understand certain financial concepts and need help defining terms, ChatGPT can function as an interactive dictionary or even help you come up with basic budgeting plans. (Just make sure never to share sensitive financial information, like your bank account number or Social Security number, since ChatGPT isn’t a secure platform for personal data.) But if you’re facing a complicated financial situation — like estate planning or help making major investment decisions in the stock market, you’ll want help from a real professional. 

ChatGPT is a great starting point for tackling your money problems, but it’s just that — a starting point. So use it only as a supplemental tool, not a substitute for professional advice.

“Unlike ChatGPT, real financial advisers don’t just analyze your accounts — they listen to you,” Kibbel said. “They weigh factors that go beyond what AI can calculate. ChatGPT, for all its usefulness, can’t do that. At least, not yet.”