The Wild West
Online reviews are so important to businesses these days that they are essentially a form of online currency. Consumers use Yelp (YELP), Google Reviews (GOOGL), and the like to make important spending decisions — and companies are well aware.
However, online reviews are largely unregulated and can be manipulated by business owners.
Reviews Drive Spending
All consumer decisions, from restaurant choices to services, can be influenced by the reviews they read online.
And that translates into real dollars: Products with three or four-star ratings on major platforms enjoy three times more sales than those with one-star ratings, according to consulting firm McKinsey & Co. Reviews are so powerful that an increase of just a single star on a business’s Yelp profile can result in a revenue jump of 5% to 9%, according to Harvard Business School research.
(Learn more: Personal Loan Calculator)
Federal Crackdown
As reviews have grown in importance, regulation has remained scant, and practices like faking reviews to inflate online rankings have taken hold.
Some sellers will advertise gift cards or free products for customers who agree to leave a positive review, or even track down customers who have left negative reviews and pressure them into removing them. Other retailers appeal to customers’ emotions to garner better reviews. Even the common practice of soliciting survey responses and feedback after a sale falls under this umbrella.
But the world of online reviews might not remain a “wild west” for much longer. The Federal Trade Commission is cracking down on companies who compensate customers for positive reviews, as well as those who censor negative ones, as both practices constitute an attempt to deceive customers and deny business to honest retailers.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
More from MediaFeed:
Americans are carrying a record amount of debt lately. Just last summer, the Federal Reserve Bank of New York announced that U.S. citizens hit a new milestone: $1 trillion in credit card debt. And when you look at overall debt, the number soars to an eye-watering $17 trillion, with the typical American having $21,000-plus in personal debt (not including mortgages).
Debt seems to be woven into everyday life. Yes, inflation is down from the scary heights of 2020 and 2021, but it’s still an issue for many. And the overall cost of living is climbing, too, which may be why Americans are taking on more debt. A person has to eat, right, and live their life? Debt can be what gets people through.
Taking a closer look at how debt is tracking by age can help as you examine your own situation and think carefully about how you will manage your own debt load.
Here, you’ll learn more about the latest Federal Reserve and U.S. Census Bureau data and what it reveals about how Americans are using credit. Overall, people in their high earning years (early middle age) carry the most debt, typically in the form of mortgages, while younger families carry more student loan debt. Let’s take a closer look.
Ridofranz
Percentage of families with debt: 81%
Total median debt per household: $39,200
For the millennials, education debt reigns. Forty-four percent of young households hold student loan debt compared to 28.3% with mortgage debt. This tells us that people in this age range are likely putting off home ownership due to the burden of student loans. The median student loan debt was $18,500 while the mean student loan debt was $33,000. That can add up to a hefty monthly payment that could discourage taking on a mortgage loan as well.
Nearly half of millennial households are also carrying a credit card balance from month to month at a median of $1,400. Paying interest on high credit card balances can quickly eat away at income — and savings.
shironosov/istockphoto
Percentage of families with debt: 86.2%
Total median debt per household: $93,700
As you can see, families in this age range have taken on more debt. In this bracket, education debt has increased (median: $20,000) but the percentage of families with student loans has dropped to 34%. Instead, mortgage debt accounts for much of the overall debt increase. Fifty percent of households have mortgage debt in this age bracket, with a median housing debt of $93,700. Their credit card debt is climbing too, with 49% carrying a median $2,500.
These increases show that people in this age range are taking on more debt — likely because they’re earning more and doing more: they’re settling into their careers, buying houses, and starting families.
Jacob Wackerhausen/istockphoto
Percentage of families with debt: 86.6%
Total median debt per household: $89,900
Most households that are firmly in middle age continue to hold debt, but the amount of debt is much less than younger households. Fewer hold student loan debt (24%, median: $20,000), and about the same number have mortgages (53%), but the amount they owe is less (median: $125,000).
There are a couple of possible explanations for this: one is that they’re earning more and have had more time to pay off their student loans and mortgages. The other is that this generation missed some of the soaring higher education costs that younger generations have had to grapple with.
They also likely entered the workforce and established their careers before the recession, while younger generations are more likely to have been hit hard by career-stalling hiring freezes and wage cuts as they were just starting out. In short, this generation and those in older households haven’t necessarily had to depend on financing as much as younger generations to get their adult lives started.
Drazen Zigic/istockphoto
Percentage of families with debt: 77.1
Total median debt per household: $69,000
This age bracket continues to see drops in overall debt. They owe less on their mortgages and even less on education loans. With fewer large expenses related to education, housing, and family rearing, households in this age bracket can focus on paying down debt and building savings as they prepare for retirement.
(Learn more: Personal Loan Calculator)
PeopleImages/istockphoto
Percentage of families with debt: 70.1%
Total median debt per household: $42,000
Households in this age range are likely beginning to or have begun their retirement. At this point, they are probably tightening their budgets to live on retirement savings, pensions, and social security. As a result, they’re spending — and borrowing less.
Despite lower mortgage and education debt, 42% of households are carrying a pretty high balance on credit cards (median: $2,500). This suggests that for smaller purchases, people rely heavily on this convenient, yet high-interest form of borrowing.
g-stockstudio/istockphoto
Percentage of families with debt: 49.8%
Total median debt per household: $20,600
Seniors in this bracket are most likely retired and living on a fixed income. At this point, a good rule of thumb is to have little to no debt. While there are fewer and lower levels of borrowing in this bracket compared to the others, close to 50% are carrying debt. While much of this is accounted for by small mortgages, some of it may be related to high cost of medical care and senior living facilities.
Jacob Wackerhausen/istockphoto
Americans have clearly become accustomed to borrowing in order to move through their everyday lives. In fact, financing is often a necessary step in order to get the graduate level training needed for a professional career or to buy a home that will become a financial asset. But are we culturally becoming too comfortable with borrowing larger and larger sums of money? And how do you know when you’ve over-extended yourself?
One way to find out if you’re carrying too much debt is to calculate your debt to income ratio by dividing your monthly debt payments by your monthly income. For instance, if your total debt payments (student loan, credit card, mortgage, car loan, etc.) come to $2,500 per month and your after-tax monthly income is $8,000, your debt-to-income ratio would be 31.25%. That means that a little over 31% of your income goes straight to your debts.
As a rule of thumb, the lower your debt to income ratio the better: a ratio of around 30% is considered very good, while a ratio of 40% or higher could threaten your financial security.
Doucefleur/istockphoto
Carrying debt is enormously stressful, especially if it keeps you from being able to save enough to feel financially secure. Here are some solutions if you’re looking for a strategy for paying down your debt.
Make a Debt Inventory
Start by listing out all of your outstanding debts and sorting them based on whether they are “good” debts (debts taken out to help build wealth or income potential like mortgages and student loans) or “bad” debts (high interest loans and loans to buy things that don’t appreciate like credit cards and auto loans). The bad, or high-risk debts will be the ones you’ll want to take on first.
Create a Debt Pay-Down Goal
Zero in on the loans that cost you the most (in terms of high interest, but also high stress). Then, set a realistic goal for paying it down — as well as a budget for how to swing the extra payments. For instance, you might cut back on some of your unnecessary spending for a set period of time, or choose to take on a side hustle to earn some extra income.
Consider Consolidating Your Debt
If you are carrying a high credit card balance or other high-interest debt, but have a steady income and good credit, you may be able to make your repayment simpler and cheaper by taking out lower-interest personal loans to pay off those debts. You can’t use an unsecured personal loan to consolidate student loan debt, but it can be immensely helpful if you’re trying to get out from under credit card debt.
Likoper/istockphoto
Many Americans have debt, with younger people having more student debt and those in midlife having more in the form of mortgages.
If you’re concerned about managing your debt (especially from credit cards), you might consolidate your high-interest debt into one monthly payment, which might offer a lower interest rate that could help you get out of debt sooner.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.Equal Housing Lender.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
fizkes/istockphoto
Saklakova/istockphoto
Featured Image Credit: HAKINMHAN/ iStock.
