Why Your Financial Aid May Plummet After Freshman Year

Grants and scholarships are the best ways to pay for college because you don’t have to repay them. But if you chose a college because it offered you the most free money, your final bill may end up bigger than you thought.

More than 72% of college students ages 18 and younger received scholarships, grants or other free money in 2015-16, according to the latest data from the National Center for Education Statistics. For students ages 19 to 23, that percentage is less than 65%.

Here are some reasons your free money may disappear after freshman year and how you can prepare.

Some scholarships aren’t renewable

All of the scholarships listed on your financial aid award letter may not be available to you next year.

For example, some schools award incoming freshmen a one-time scholarship for visiting the college’s campus or interviewing with the school, says Tori Berube, vice president of college planning and community engagement at The NHHEAF Network Organizations, a nonprofit agency based in Concord, New Hampshire.

Other scholarships are renewable if you meet specific requirements. These may include maintaining a particular grade point average, choosing a certain major or following the school’s code of conduct.

Review your scholarships to see which are renewable, and make sure you meet their terms — even if that means doing “handstands in the quad on Tuesdays,” says Berube. You should be able to find this information in your award letter, on the school’s website or by calling the financial aid office.

Financial situations change

Typically, schools aspire to maintain overall awards from year to year, says Stacey MacPhetres, senior director of college finance for College Coach, an educational adviser located in Watertown, Massachusetts. But the types of financial aid within that award may change.

For example, students have higher federal student loan limits after their first year in school. To account for this, a college could replace a grant with a loan of an equal amount for your sophomore year.

“I think a lot of families see that as a pretty significant bait and switch,” says MacPhetres. She believes that is not necessarily the case because the student still receives the same total amount of aid. Still, scholarships and grants are always more desirable than financial aid you have to pay back, like student loans.

Other changes to your financial circumstances could lead to you losing aid altogether. For example, say your older sibling graduates or moves out of your parents’ house while you are enrolled. The financial aid calculation now sees your family as having more available income, which increases the amount you’re expected to pay out of pocket.

When you submit the Free Application for Federal Student Aid, or FAFSA, be aware of changes to your income. If these are one-time events — like your parent taking a stock or a retirement distribution — MacPhetres says you should ask the financial aid office to treat this money as an asset, instead of income. Assets have a smaller impact on your ability to receive financial aid.

Tuition and fees increase

Even if you receive the same amount of aid year after year, it may feel like less because your college’s costs increased. On average, tuition and fees have risen roughly 3% annually over the past 10 years, based on data from the College Board.

Mark Salisbury, the founder of TuitionFit, a website aimed at increasing transparency around college pricing, offers this example: A school with a cost of attendance of $40,000 might offer you a $20,000 scholarship. The cost of attendance then rises each year, while the scholarship doesn’t.

“By the time the student graduates, tuition is $48,000 and they end up having to pay substantially more,” says Salisbury.

Planning ahead is the best way to prevent these additional costs from catching you by surprise. To help predict future tuition and fee increases at your own school, look it up on the College Navigator website.

College is a multiyear investment. If you can’t make the numbers work long term, be honest with yourself. Transferring to a less-expensive college may feel drastic, but it won’t necessarily hurt your education.

“What you do in college matters far more than where you go,” says Salisbury. “Go to a place that is less expensive, and then go in and make the most of it.”

This article was written by NerdWallet and was originally published by The Associated Press.

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The article Why Your Financial Aid May Plummet After Freshman Year originally appeared on NerdWallet.

These 3 Tricks Can Help You Shop Less

Shopping can be a form of relaxation, an entertaining way to spend time or even a hobby. But it can turn into an expensive habit.

Whether you sometimes give in to a weakness for designer handbags or brand-name shoes, here are three ways to help you manage the urge to spend. Pick the tactic that works best for you: postponing the purchase, making a plan or doing something else instead.

1. Pretend (or postpone)

If you want to feel like you went shopping without spending any money, do everything you would when you really shop, but stop short of actually buying anything.

Browse online, pick out a shirt in your favorite color and even add it to your cart. If you’re in-store, go window shopping without your wallet. Then wait.

“Have some type of cooling off time period before you commit to purchasing the item,” says Ross Steinman, a professor of psychology at Widener University in Pennsylvania. “You should attempt to eliminate consumer decisions in an emotional state. This often leads to impulse buys.”

That delay period will vary from person to person, but Steinman suggests waiting at least one day. Depending on the purchase, you could wait a week or even a month before deciding whether to buy the item in question.

This might be enough to work the urge to buy out of your system. But just in case, eliminate any remaining temptation.

“Delete those items so that they are not waiting for you in your shopping cart only one click away to purchase the next time you visit the online retailer,” Steinman says.

2. Prepare

But pretending isn’t always a reasonable solution. At some point, you will surely need to buy something. And that’s OK.

It’s actually best to still go to stores, rather than avoiding shopping altogether, advises Dr. Kevin Chapman, a licensed clinical psychologist in Kentucky. That is, as long as you’re proactive and prepare yourself mentally before you shop.

If you “ride the wave” and confront the emotion driving why you want to shop, you can teach yourself self-control, he says.

“Ultimately, you’re teaching your brain a new association. Meaning I can think of a store like Target or Costco or Ikea and think that it doesn’t compel me to shop per se. It’s just another store.”

He compares the strategy to overcoming a fear of elevators.

“Say I have an elevator phobia. Well ultimately, at some point, I have to confront an elevator,” Chapman says. “But the way you do it is you don’t throw someone into an elevator and say, ‘sink or swim.’”

Instead, you prepare so you know what to expect. As it pertains to shopping, Chapman says to formulate a “game plan.”

Recognize that you have a tendency to overspend. Create both a budget and a list before you go shopping (in-store or online). Then, hold yourself accountable to that list and feel a sense of confidence that results when you succeed.

3. Ponder

As you shop, keep track of your buying behavior so you can identify patterns. Steinman recommends noting things like the cost, time of day and what the item was for, among other details.

“It will raise awareness about how much somebody is spending and also identify trigger points,” he says.

Ask yourself questions about any trends that you notice. Steinman gives examples: Do you mostly make purchases in the late evening? During the day? After you’ve had coffee and increased your energy level? What about after you receive your paycheck?

As you do so, think about your emotions. If you’re looking for the high that comes along with shopping, Steinman recommends doing something else in its place that gives you a similar feeling — for example, donating your time or resources.

And keep in mind that the temporary emotional high that comes with impulsive shopping is just that — temporary, according to Chapman. It may be a little easier to give up overshopping if you know the feeling is fleeting.

This article was written by NerdWallet and was originally published by The Associated Press.

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The article These 3 Tricks Can Help You Shop Less originally appeared on NerdWallet.

‘Tidy Up’ Your Finances So Each Dollar Sparks Joy

Marie Kondo has inspired countless people to wipe out clutter. Her KonMari organizing method, popularized by her book and Netflix series, lays out how to get more joy from your life and possessions.

This approach can extend to your money, too. Applying her mindset can reduce the financial clutter in your life and help you make a better plan for each dollar. Here’s how to “Marie Kondo” your finances.

Commit — and imagine a better future

Before you dive in, commit yourself to the task and visualize what you’ll gain.

Do you want to spend less on eating out? Are you saving up for a car or a house? Have a clear picture of your goal — a zero balance on your credit card, or that new car or home — to stay focused throughout the process.

“If you can create a mental image of what your life with your money will look like on the other side, it’s a lot easier to create a path to get there,” says Kimberly Zimmerman Rand, a Boston financial coach.

Understand your categories

Kondo’s method of tidying focuses on sorting through categories, like clothing, books and paperwork, and miscellaneous items.

Pull a few months of bank and credit card statements and take the same approach to your three main spending categories: needs, wants and savings.


The non-negotiables, like housing and debt payments, fall into this category. These monthly expenses may not bring you joy, but they keep a roof over your head and your credit score afloat.

If this category consumes an outsized portion of your income, see where you can trim. Trading in your car for a less expensive one, for example, could mean an extra $100 in your bank account every month. That gives you the ability to tuck a little more into savings.

Debt payments may be an unavoidable part of your budget, but you can find ways to make them fit more neatly. If you’re sorting through a mess of credit card bills, for example, see about reworking the terms. By consolidating debt onto a credit card with an introductory 0% interest rate or via a personal loan, you can pay less in interest, though you’ll need good credit to qualify. And you’ll have less paperwork and fewer monthly payments to manage.


Chances are this category brings you the most joy — but it’s also likely where you can trim the most. Expenses like meals out, new clothes or vacations fit here.

Examine your spending on wants and ask if each one brings commensurate enjoyment. If not, trim or cut that expense. Keeping that money in your accounts could make you happier by reducing financial stress or helping you see progress on retirement savings.

Subscription services are an easy target, says Brian Walsh, a certified financial planner and manager of financial planning at SoFi, an online lender.

“When people start tracking their spending, they may see unused services come up,” Walsh says. “Gym memberships, game memberships, Netflix and Hulu at the same time. These can be easy cuts to make.”


This category can be a little too easy to keep minimal. In fact, 4 in 10 Americans said they couldn’t come up with $400 in an emergency or would have to borrow or sell something, according to a May 2018 report by the Federal Reserve.

Building up your savings helps keep your finances tidy when life gets messy, such as when a sudden car repair pops up. Tucking away even $50 a month can make a difference.

Set yourself up for success

Once you’ve tidied up your spending categories, it’s time to set yourself up to achieve financial goals. Streamline your money management and reduce paperwork you may have lying around.

Automating payments for things like utility bills, student loan payments and credit card payments is an easy option. It also protects you from accidentally missing a payment and tanking your credit score.

Shred old financial paperwork, such as bank statements or paid utility bills. Signing up for digital versions online means there’s no need to keep them. Don’t go overboard, though; you do want to hang on to tax documents.

To keep up the good habits in the long run, Kristen Holt, CEO of the nonprofit credit counseling agency GreenPath Financial Wellness, recommends focusing on your goals.

“Take steps to set and forget your finances, like automating payments,” Holt says. “And continue to tie your work back to your dream.”

This article was written by NerdWallet and was originally published by The Associated Press. 

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The article ‘Tidy Up’ Your Finances So Each Dollar Sparks Joy originally appeared on NerdWallet.

Accepted! How to Decipher Your College Aid

With college acceptances in hand, now comes the hard part: understanding your financial aidoffers.

These letters are notorious for being laden with jargon that differs from offer to offer, making comparison difficult. But you can learn how to interpret award letters to understand the costs and choose an affordable option.

What to expect from aid offers

Financial aid offers should include all of the federal, state and school aid you can access. That could mean free aid, such as grants, scholarships and work-study opportunities, that doesn’t need to be repaid, and unsubsidized and subsidized federal loans, which do. If these aid types are grouped together without explanation, they can be hard to distinguish.

Your offer also might include a parent PLUS loan as part of the award, but avoid using it if possible. These loans have higher interest rates than loans made directly to students. And unlike typical student loans, only parents can take them on, and they require credit history to qualify.

Schools also must provide the cost of attendance, but that’s not the amount you owe. It bundles indirect costs like books, supplies and transportation, with direct costs such as tuition, fees, housing and food.

The cost of attendance is usually an average, says Brenda Hicks, director of financial aid at Southwestern College in Winfield, Kansas. Things like room and board could be pricier if you opt for a more expensive package, like a single room.

Why offers are difficult for students to read

Schools use different names to refer to the same type of loan.

For instance, one college’s aid offer might list a “Federal Unsub Stafford Loan,” and another school’s might say “DL Unsubsidized Loan.” But they’re the same thing.

Unsubsidized federal student loans are the only type of federal loan every student can access, regardless of financial need. They’re different from subsidized loans, which don’t accrue interest while the student is in school. Subsidized loans ease costs for students, which is why they’re given to those who demonstrate need.

But among 455 college aid award letters, there were 136 different names used to describe the federal unsubsidized loan, according to a 2018 study by New America, a nonpartisan think tank, and uAspire, a Boston-based college affordability nonprofit.

“How can we expect families and students to navigate this process if even the aid that everyone qualifies for is called something different?” says Rachel Fishman, deputy director for research with the education policy program at New America.

There are two main obstacles for colleges in standardizing offers, according to Fishman: There’s no legal standard for language in award letters, and schools use different software to manage aid.

In a push for more consistency, the U.S. Department of Education recently issued guidance on what schools should avoid, such as presenting the cost of attendance without a breakdown. There’s also bipartisan support in Congress to make aid offers more uniform, including two current bills.

Some colleges have tried to address the problem, but others continue to use the same format they’ve used for years, says Brendan Williams, director of knowledge at uAspire.

The financial aid office at the University of Nebraska Kearney overhauled its award letter last year, including color coding each aid type and providing an estimated net cost. Net cost is the cost of attendance minus free aid. It represents the amount that borrowers will have to cover.

Despite the changes, families still often want a walk-through, says Mary Sommers, the school’s financial aid director. “That’s OK, that’s our job,” she adds.

How to compare financial aid award offers

To compare financial aid award offers, experts recommend these steps:

  • Create a spreadsheet with separate columns for each school.
  • Under each column, start with the total cost of attending each school.
  • List each award type and amount.
  • Add all free aid together first and subtract from the total cost to attend.

Since you want to take all free aid first, what you have left is the amount you would need to cover with savings, income or loans. Compare this bottom-line amount with other schools on the list.

You can also use tools like the Consumer Financial Protection Bureau’s Compare Schools tool or the National Association of Student Financial Aid Administrators’ Award Notification Comparison Worksheet.

“Bottom line: I would encourage people to take a long look at that letter, read it all, make sure they understand it and reach out when they don’t,” says Hicks.

If it’s unclear how to accept one type of aid or reject another, contact the school’s financial aid office.

This article was written by NerdWallet and was originally published by The Associated Press. 

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Anna Helhoski is a writer at NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

The article Accepted! How to Decipher Your College Aid originally appeared on NerdWallet.

Bye-Bye, Brick-and-Mortar: How One Couple Made the Switch to Online Savings

If you’ve been considering making the jump to an online bank, here’s a reason to do it now: A recent Federal Reserve rate increase may prod banks to give their customers higher interest rates on their savings in 2019. Here, one man walks us through why he and his wife decided to take the plunge with a high-yield online savings account.

Paul, 33, writes tax regulations for a California government agency. (Due to the sensitive nature of his previous work as a tax collector, he prefers not to publicize his last name.) After selling a rental property in November, he and his wife, Jocelyn, 32, decided to search for a good place to park the proceeds. They decided a high-yield savings account at an online bank would be their best bet for high returns on their money.

The goals: a college fund and diversification

The family’s savings goals are a bit nebulous at the moment, Paul says, but with a 2-year-old on the scene and the possibility of other children in the future, he and Jocelyn want to have savings socked away for college and diversify where they keep their money. As state employees, Paul and Jocelyn use a local credit union for their day-to-day checking accounts.

“Besides our checking and savings, we have a mutual fund, a retirement account and stocks we own ourselves. I’m a fan of not putting all my eggs in one basket,” Paul says.

Why online banks were appealing

“It’s as simple as: I wanted to make more money off of my money,” Paul says. “I wanted something secure, reliable and not as open to market fluctuations, as opposed to a money market account. I also didn’t want to have to worry about locking away my money in a bond.”

Online banks are typically able to offer higher interest rates than brick-and-mortar banks because they don’t have to pay to maintain branches. An annual percentage yield, or APY, of 0.01% — a typical rate at a traditional bank — versus the 2% or more currently available at an online bank might not sound like much. But over the years, it can mean a difference of thousands of dollars as your money collects compound interest.

Say you put away a $10,000 windfall and added $100 per month to a bank account with a 0.01% APY for 10 years. With compound interest, you’ll have earned just $17. In an account with an APY of 2%, however, that same money will have earned more than $3,500 in interest. That allure, combined with ever-improving technology for online customer service, has made online banking increasingly popular.

But first, a few considerations

Paul and Jocelyn did have some initial concerns about online banking.

“I’m generally more distrustful of apps, and hacks make me nervous,” Paul says.

When researching online banks, he not only considered a bank’s website but also looked it up on the Better Business Bureau website, verified it was insured by the Federal Deposit Insurance Corp. and checked into whether the bank had ever been in the news for fraudulent behavior.

Pulling the trigger on an online account

After doing online research, Paul chose CIT Bank, an online-only financial institution that currently offers a higher-than-average 2.45% interest rate for customers who either have a $25,000 balance or who deposit $100 or more into their account monthly.

Paul says he’s not necessarily a brand loyalist, however; like many interest rate optimizers, he says he plans to go where any given bank will give him the best return on his money. He looks past promotional bonus offers on savings accounts — many of which come with strings attached, such as committing to stay with that bank for a certain length of time — in favor of more flexible arrangements that offer a greater return in the long run.

But for now, Paul plans to let his money do the work for him and his wife in their new online account.

Should you switch?

Online banking does have its drawbacks for some customers, especially those who enjoy face-to-face interactions with service reps or who aren’t as comfortable with the idea of using mobile technology to manage their money.

But for customers willing to take the plunge, the difference in the long-term returns of a high-yield interest rate can be well worth the effort of switching.

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The article Bye-Bye, Brick-and-Mortar: How One Couple Made the Switch to Online Savings originally appeared on NerdWallet.

Ditching Credit Cards? Here’s What Could Happen to Your Score

Maybe you’ve been ordering too much stuff on Amazon or watching your bank account shrink after spring break travel.

When your spending spins out of control, one way to rejuvenate your finances is to go on a financial fast. But while chopping up your credit cards may feel cleansing, you might be surprised at what it could do to your credit score.

Here’s how to think about whether to cut them up, or simply cut back.

Cutting up your cards but not closing them

If you stop using your cards — whether you dice them up or put them in the freezer — but keep the credit accounts open, your score will go up, says John Ulzheimer, a credit expert who has worked for credit bureau Equifax and credit scoring company FICO.

“The primary reason you want to keep your card open is because your score benefits from the unused credit limit,” he says.

Credit scores are heavily influenced by how much of your available credit you use. When you stop charging purchases to your cards, the balances you’re carrying will go down with each payment you make. Ideally, experts recommend using no more than 30% of your credit limit on any card, and lower is better.

However, once you’ve paid the balance down to zero and stopped using the card completely, issuers may lower your credit limits or close your accounts if there’s no activity on them. How long it takes depends on the issuer, Ulzheimer says.

“Some of them will start to reduce credit limits after 12 months of inactivity,” he says. “Some card issuers will let you go years before they do anything.”

To prevent your accounts from being closed, charge a small purchase to your card every now and then and pay it off promptly, Ulzheimer says.

Closing your credit card accounts

If you take the more serious step of closing your accounts, your score is likely to drop in the short term. The reason is the same as before: Credit scores are influenced by how high your balance is compared with your available credit.

Closing an account lowers your overall credit limit (or eliminates all of it if you have only one card). Now, even if you’re carrying the same balance, it represents a bigger chunk of your remaining credit, which could cause a drop in your score.

“Unless you’ve got some punitive annual fee on a card, I can’t think of a reason to close it,” Ulzheimer says. You may want to go on a spending fast right now, but your score will matter if you apply for a loan or credit card down the road, he says.

A credit card can also be useful in case of emergencies. Pair it with a decent emergency fund so you can pay the balance back down as soon as possible.

Turn your spending fast into a healthy diet

A fast is a temporary measure. To keep your spending under control long-term, start tracking your cash flow, says Daniel Milks, a certified financial planner and founder of Woodmark Wealth Management in Greenville, South Carolina.

“Figure out where your money is going and where it’s coming in,” he says. “The more you know about yourself and what you’re spending on, the more equipped you are to control it.”

Armed with that knowledge, you can build a budget that helps you cut back on expenses and save for bigger goals, like paying off debt or saving for a down payment.

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The article Ditching Credit Cards? Here’s What Could Happen to Your Score originally appeared on NerdWallet.

Yes, You Should Ask Your Parents About Their Financial Plans

Parents are often more than happy to offer financial advice to their kids. They like to feel needed and want to make sure you’re on solid financial ground. But it’s important to turn the tables and ask about their financial plans, too.

Are they saving for retirement? Have they updated their will? What’s their plan for long-term care, should they need it?

It doesn’t matter if you’re living on ramen or running your own business, asking your parents about their financial future can feel odd. But life moves fast. And your parents’ financial plans can and will affect your own, eventually. So it’s important to talk early and often about how they’re planning for retirement and the often high cost of aging.

“It’s never too soon to have this conversation,” says Greg Young, owner of Ahead Full Wealth Management LLC in Rhode Island. “If something happens to your parents, not only there goes your safety net and a key part of your support network, but their affairs will likely pile onto you.”

Tact is everything when talking about money. Show them you want to learn and you want to help. Use your own life events, like a new job, a new house or an expanding family, as an opening to talk about their plans.


It’s important to know if your parents are saving, but this conversation isn’t just about money. It’s also about their dreams for retirement.

The talk

Your first real job (or any new job) is a good chance to ease into the conversation. Ask your parents for advice as you navigate 401(k) contributions. A simple “What did you do?” gives you insight without being invasive.

House hunting? That’s another opportunity to check in with your folks about their retirement plans. You know, in case you need to add “in-law suite” to your wish list.

Long-term care insurance

The cost of extended care is staggering — assisted living carries a median price tag of $48,000 per year, while the annual median cost for a nursing home is nearly $90,000 for a semi-private room, according to an annual survey by Genworth, an insurance company. In-home care can be just as costly, depending on the services needed.

Long-term care insurance helps offset the cost of nursing care and help with routine activities like eating, bathing and dressing, whether at home or in an assisted living or nursing home.

The talk

Long-term care insurance gets more expensive with age, so most people who buy it do so in their 50s or 60s. It’s good to start the conversation early to have the topic on your family’s radar.

“‘Do you have long-term health care insurance?’ That’s a specific question that is pretty palatable,” says Thayer Willis, a wealth counselor. “If they say yes, the follow-up question is: ‘How does it work exactly?’”

If the direct approach doesn’t jibe, try backing into the conversation. Use someone else’s experience as an example and ask whether your parents have considered assisted living in the future and how they would pay for it.

Estate planning

Sorting through an estate without clear directives can tear families apart. That’s the last thing your parents want. Talking openly about things like wills and trusts, life insurance and advance medical directives can help you understand what they have in place, and give you insight into their intentions, Young says.

“Knowing what to expect from them, or that they’ve done some planning, will certainly make an emotional eventuality a little easier,” he says.

The talk

Starting your own family, and setting up your own estate plan, is a great opportunity to ask your parents what they have in place. You can also use someone else’s experience to start the conversation.

“Ask questions like: ‘A friend from work had a parent pass and they could not find any paperwork. … Do you and Mom have all your paperwork together in one place? If you were to pass, who has access to it?’” says Mark Struthers, owner of Sona Financial, a wealth management firm.

Your folks might not be comfortable talking about their finances. That’s OK. Don’t push them. Instead, make it clear that you’re ready and willing to talk another time, Willis says.

“You might need to take the approach of planting a seed, and that’s all you do in the first discussion,” she says. “Which is another reason for beginning early.”

This article was written by NerdWallet and was originally published by The Associated Press. 

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The article Yes, You Should Ask Your Parents About Their Financial Plans originally appeared on NerdWallet.

How to Get the Most out of Online Reviews

In the world of online shopping, often buyers will purchase an item only after they see that other people also like it. And the easiest way to find out consumer sentiment? You guessed it: reviews.

Many online purchases are based on careful consideration of star ratings and product reviews left by complete strangers. Some 82% of U.S. adults say they at least sometimes read online customer ratings or reviews before purchasing items for the first time, according to a 2016 Pew Research Center survey.

But should you trust customer reviews when deciding what to purchase? And do these mysterious reviewers have your best interests in mind? Here’s what you need to know.

‘Healthy skepticism’ is warranted

Consumers today are skeptical, says Zach Pardes, director of advertising and communications, North America, at review platform Trustpilot. Shoppers use Trustpilot to read about companies and write reviews, while businesses use it to collect reviews.

“We live in a time when trust is completely under attack,” Pardes says. “This is the ‘fake news’ era. So people are reading [reviews] and consuming them more than ever before, but I think there is a healthy skepticism at times of what they’re reading.”

It seems shoppers are skeptical for good reason. Fake reviews do exist, according to Saoud Khalifah, CEO of Fakespot, an artificial intelligence platform that analyzes online reviews. Fake reviews include, but aren’t limited to, bot-generated reviews and reviews that are influenced by the seller.

Fakespot reads hundreds of reviews per second and notes things such as how many reviews have been left for a product over time, common words used in the reviews and the quality of the reviews. Shoppers can use Fakespot’s website to analyze reviews (by entering a URL) for products at a handful of e-commerce sites, such as Amazon and Best Buy.

So why are fake reviews out there? Khalifah says consumers are wary of products with no reviews or zero stars. A number of positive reviews can make a product look better.

Real reviews are still valuable

Of course, not all user reviews you read online are fake.

Authentic reviews are a valuable tool when making a variety of purchases. They can help consumers make important financial decisions by learning about someone else’s experience. This may include which hotel to book, where to eat dinner or what brand of vacuum to purchase.

Pardes says Trustpilot features flagging mechanisms visible to users, plus artificial intelligence technology and a team in place to detect and remove fake reviews.

Perhaps one of the best known review websites is Yelp. Kathleen Liu, a company spokesperson, compares the popular site to a modern-day version of word-of-mouth.

“Before platforms like Yelp existed, consumers had to rely on yellow pages, newspapers, magazines and local advertisements for information about local businesses,” Liu said in an email.

Yelp takes measures to ensure “high-quality content,” Liu says. That includes allowing Yelp’s community of business owners and users to flag content that may violate the site’s terms of service, as well as human moderation of reviews.

How to make an informed purchase

Since legitimate user reviews do provide helpful information, reviews as a whole shouldn’t be discounted. But how can you tell the difference between what’s real and what’s not? It’s close to impossible for the everyday consumer.

But if you do your due diligence, you can make an informed purchase.

  • Check more than one review source. Pardes advises consumers to read reviews on multiple platforms. “If you’re about to book a $10,000 vacation, you’d never rely solely on the photos and the reviews posted by that hotel’s marketing team,” he says. “You’re going to want to use a third-party independent resource.”
  • Read more than a handful of reviews. Pardes says there is “safety in numbers.”
  • Watch for warning signs. For example, does the review focus more on the company and its customer support than on the actual product? This could indicate a reviewer was influenced by the seller or company, Khalifah says.
  • Question perfection. Pardes says consumers don’t trust reviews that show only five stars. “Nobody’s perfect, so you can’t possibly have a perfect five-star review in every single category of your business,” he says.

This article was written by NerdWallet and was originally published by The Associated Press.

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The article How to Get the Most out of Online Reviews originally appeared on NerdWallet.

Relax — Your Credit Score May Be High Enough

Easy access to free credit scores has helped many Americans improve their credit. But at a certain point, chasing every possible point gets you nothing except bragging rights.

How do you know when your credit score is high enough for you to relax?

Checking your credit score is a bit like checking your weight. You don’t need to obsess over every fraction of a pound, and an occasional indulgence (or high credit card balance) won’t do lasting damage if your habits are generally healthy.

What’s your goal?

Most credit scores are on a scale of 300 to 850. Nationally, the average credit score is just above 700 for FICO and 680 for its competitor, VantageScore. So that’s one way of comparing your number.

But being about average doesn’t necessarily put you in the best position to qualify for the credit product you want at decent interest rates.

Atlanta-based credit expert John Ulzheimer, who has worked for FICO and credit bureau Equifax, says a healthy range depends on what your goals are. If you want to buy a car, you probably need a score of at least 720 to get the lowest interest rates, he says.

If you want to qualify for a mortgage with the best terms or a top-tier rewards card, Ulzheimer suggests you aim for at least a 760 — and higher is safer.

Morris Armstrong of Connecticut, founder of Armstrong Financial Strategies, likes having a score cushion. “I think that if your numbers are above 780 that you are fine and should not worry. That is still an excellent number, but if you are competitive — and I understand that it is now trendy — then you will want to achieve a higher bragging-right number.”

A “perfect” score — an 850 on the most commonly used scale — requires a credit history spanning many years and having few or no credit missteps. And, as far as lenders are concerned, someone with a 780 or so is every bit as likely to repay borrowed money as someone with an 850.

Ultimately, your score is a tool to get approved for credit products that help you achieve your goals. Reaching those goals is more important than obsessing about a couple of points on your score.

Check your credit health

If you’re not sure where your credit score stands, there are plenty of ways to check it. Many personal finance websites and some credit card issuers offer scores to consumers for free.

If you have years of on-time payments and use your credit cards fairly lightly, you probably have a decent score. If you are younger, it may take a little time to build a great score, and learning about how credit works is a good way to do that.

If there’s a certain product you want, say a mortgage or a travel rewards card, you can often get a general idea of the minimum score needed for approval. It’s best to be comfortably above that because your scores fluctuate a bit depending on your recent financial activity.

Habits that help

Healthy credit habits, practiced consistently, build high scores. For best results:

  • Pay on time, every time. Payment history is the largest of the factors that affect your credit score, so pay attention to it.
  • Use only a small portion of your credit limit. The next biggest influence on scores is “credit utilization,” your balance relative to your credit limit on each card.
  • Keep cards open unless you have a compelling reason — such as fees you think are not worth it or poor customer service — to close them. You want to show a long history of using credit responsibly.
  • Space credit applications at least six months apart.
  • Check your credit score at least monthly to see how your spending and payment behaviors affect your score.

And if you make a mistake? Expect to see it reflected in your score. But you can speed recovery by getting back in the routine of the healthy habits above.

Some mistakes fade more quickly than others. A late payment can damage your score for some years. High credit utilization, on the other hand, stops hurting your score once your lender reports you’ve paid down the high balance.

You can try to squeeze out every possible point, but if your score is comfortably high, it’s unlikely to boost your borrowing power. Once you’re well into the worry-free zone, you can cruise if you want to.

The article Relax — Your Credit Score May Be High Enough originally appeared on NerdWallet.

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