Money Management

Consumers could end up paying the price. 

It’s common for retailers — both online and brick and mortar — to offer customers the option to return purchases for free. And in the case of the former, retailers will often bear the cost of processing and shipping items back to their warehouses and distribution centers.

Meanwhile, data from Salesforce shows that returns for the 2022 holiday season are expected to rise 57% from the 2021 season after all is said and done. Salesforce also anticipates that consumers will return over $1.4 billion in holiday orders from this past season.

That’s apt to cost retailers a lot of money. And it could come back to haunt consumers in the coming year.

When free returns aren’t really free

Returning merchandise to stores is an age-old practice. And there’s an expense involved in restocking items that are returned in person. But where retailers really tend to take a hit is online returns, because they have to absorb the cost of having items shipped back to their facilities.

Some items that are returned to retailers can be resold to other customers, but that’s not always the case. And often, retailers have to eat the cost of returns and make up for it in other ways. For the most part, that means charging more money to compensate.

Given the notable uptick in returns for the 2022 holiday season, it wouldn’t be surprising to see the cost of certain goods increase in 2023 as retailers attempt to recoup some of their losses. But higher prices in stores could really hurt consumers at a time when inflation is still raging.

We’re starting off 2023 with inflation at an elevated level. Thankfully, the rate of inflation has cooled somewhat since peaking in mid-2022. But consumers are still looking at spending more this year on things like food, housing, and utility bills. And so they really can’t afford a higher credit card tab at retailers.

No great solutions

A big reason consumers tend to return so many goods is that there’s no penalty for doing so. But if retailers continue to take a major financial hit by offering free returns, especially in the context of online orders, they might pull back on that practice. If that were to happen, it would likely change the way a lot of people shop.

Many people shop online because it’s easy, convenient, and risk-free. But charging customers for returns adds a level of liability into the mix. And that’s not something consumers want. Unfortunately, though, they may not get a choice if the high cost of returns forces retailers to adopt new policies that help them stay afloat.

In fact, some retailers already charge a restocking fee for returned online orders. Much of the time, that fee is modest. But consumers could see restocking fees increase as online returns pick up.

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Image source: Getty Images
What happenedHilton announced plans to add Spark by Hilton, a new brand, to its portfolio of properties. Spark by Hilton is a premium economy brand that will provide guests with a simple, reliable, and comfortable stay at an accessible price point. “While room rates will vary by market and availability, Spark by Hilton will be competitively priced in the mid-$80s to low $90s range,” a Hilton representative told The Ascent.
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So whatSpark by Hilton properties will offer the following:Welcoming public spaces with multi-functional seating Simple rooms with practical amenities like streamlined furniture, in-room refrigerators, and multi-purpose workspaces 24-hour check-in and Digital Key capabilities Complimentary breakfastA 24-hour retail market for added convenience The new brand’s guests can also enjoy the benefits of the Hilton Honors program. This loyalty program is free to join and provides valuable perks to loyal customers, such as members-only discounts on rooms and free in-room WiFi. “Serving guests looking to maximize the value of their travel experience, Spark by Hilton will deliver reliable, friendly essentials with unexpected touches,” Hilton said in a press release.Now whatMany budget-conscious travelers want to continue exploring the world but don’t want to disregard their personal finance goals. Affordable hotel options allow more people to prioritize travel without sacrificing them. Staying at a hotel brand like Spark could help travelers save on accomodations so they can put extra money towards other travel costs. In addition to booking affordable accommodations, travelers can maximize their savings and improve their experience by taking advantage of hotel loyalty programs, such as the Hilton Honors program. It can also be worthwhile to book hotel stays with hotel credit cards to access additional perks and earn points to redeem for free or discounted hotel stays. Many frequent travelers use travel rewards credit cards to save money on travel costs. Top credit card wipes out interest until 2024If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 

What happened

Hilton announced plans to add Spark by Hilton, a new brand, to its portfolio of properties. Spark by Hilton is a premium economy brand that will provide guests with a simple, reliable, and comfortable stay at an accessible price point.

“While room rates will vary by market and availability, Spark by Hilton will be competitively priced in the mid-$80s to low $90s range,” a Hilton representative told The Ascent.

So what

Spark by Hilton properties will offer the following:

Welcoming public spaces with multi-functional seating Simple rooms with practical amenities like streamlined furniture, in-room refrigerators, and multi-purpose workspaces 24-hour check-in and Digital Key capabilities Complimentary breakfastA 24-hour retail market for added convenience

The new brand’s guests can also enjoy the benefits of the Hilton Honors program. This loyalty program is free to join and provides valuable perks to loyal customers, such as members-only discounts on rooms and free in-room WiFi.

“Serving guests looking to maximize the value of their travel experience, Spark by Hilton will deliver reliable, friendly essentials with unexpected touches,” Hilton said in a press release.

Now what

Many budget-conscious travelers want to continue exploring the world but don’t want to disregard their personal finance goals. Affordable hotel options allow more people to prioritize travel without sacrificing them. Staying at a hotel brand like Spark could help travelers save on accomodations so they can put extra money towards other travel costs.

In addition to booking affordable accommodations, travelers can maximize their savings and improve their experience by taking advantage of hotel loyalty programs, such as the Hilton Honors program.

It can also be worthwhile to book hotel stays with hotel credit cards to access additional perks and earn points to redeem for free or discounted hotel stays. Many frequent travelers use travel rewards credit cards to save money on travel costs.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Don’t fall victim to a mortgage mishap. 

While mortgage rates dropped to record lows during the pandemic, things have changed in recent months. Rates have crept up steadily and mortgage loan rates are now higher than they’ve been for many years.

With today’s mortgage rates coming in so high, financing your home will be more expensive than it would have been just a year ago. During this time of elevated rates, there are a few mortgage mistakes you absolutely cannot afford to make.

1. Choosing the wrong kind of mortgage

With interest rates rising, the stakes are higher when you choose a mortgage type.

For example, if you’re tempted by a 15-year mortgage due to the fact the rates are lower, you should be aware the shorter pay-off time means you’ll pay a lot more each month. That comes at a big opportunity cost and makes your budget less flexible.

Likewise, if an adjustable-rate mortgage seems attractive, you need to remember there’s a risk of your rate adjusting upward and your loan becoming even more costly. So you should think twice about whether these risks are worth the slightly lower starting rate an ARM can offer.

2. Stretching to buy more house than you should

If you fall in love with a house that’s a little bit above your budget, it might not be such a huge deal to just take out a larger mortgage loan when interest rates are below 3%. But, with rates so high now, it’s especially important you don’t try to buy at the top of your budget. Even a little bit more money borrowed will mean paying a lot more in interest charges at today’s rates.

3. Not practicing your payments before committing

If your mortgage payment is going to be higher than your rent — which is a huge possibility with today’s rates — then you need to practice making these bigger payments before you commit to taking them on for 30 years.

You can do this by putting the difference into your savings. So if your rent is $1,000 monthly and your mortgage would be $1,500, pay the extra $500 into a high-yield savings account you use, to help cover closing or moving expenses.

By testing out living with a higher payment, you can make sure you’re actually comfortable paying your mortgage loan before you’ve promised to pay it for years to come.

4. Not shopping around for a home loan

Finally, if you don’t shop around and compare loan offers, you’re making a huge mistake. When rates are already pretty high as they are now, you don’t want to pay more than necessary just because you didn’t take the time to compare what multiple different lenders would offer you.

The good news is that you can avoid all four of these mistakes. By doing so, you’ll make sure to get the best home loan possible, even during a time when borrowing is a bit more expensive than it was over the past several years. This will help keep your costs as reasonable as they can be so you don’t regret buying your home.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More