01.Money comparison websites
Finance comparison websites are a powerful tool for consumers faced with hundreds of financial products to choose from and a deluge of advertising. At the time of writing, there were over 100 transaction accounts, more than 150 credit cards and over 350 home loans on offer.
Without using a comparison website, how would you find all these products, let alone compare them? However, while undeniably useful, comparison websites should be approached with care. You need to carefully filter the information to make sure you find the products most relevant to your purposes.
For this report we looked at three leading websites - InfoChoice.com.au, Mozo.com.au and RateCity.com.au. Mozo and InfoChoice. All three, in particular, have comparison tables that typically cover a large range of products. (And in the interests of transparency, we should mention upfront that our Compare, Switch & Ditch site is powered by Mozo.)
Sifting out potential bias
Once you arrive at the homepage of most comparison websites, you can choose a product category. This usually brings up a range of deals or ‘top picks’. If you want to make sure you are viewing all the relevant products contained on the website, you’re best to ignore these and locate the button or link that allows you to compare all products (if you’re unfamiliar with these sites, you might have to search to find it).
Once you hit the compare all button, the full list of products appears. You can then click on a product to find out more information, and even apply online. However, there are a few important things to consider:
Default sorting Comparison tables are not always organised in the best way for your needs. Take InfoChoice.com.au as an example. Its default is to list credit cards according to annual fee. This is great if you pay the full balance each month. But if you don’t, you’re probably better off looking for a card with a low interest rate. In that case you’ll want to sort by interest rate. You can often input further data (at InfoChoice.com.au by using the refining options above the table) to prioritise the products that are better for you.
Sponsored listings Again, using InfoChoice as an example, the site shows sponsored listings (products that pay for premium position) first. Other comparison websites may also show sponsored listings in other places. InfoChoice allows you to simply uncheck a box (top right) and the table will function as normal, but in general, it’s important to remember that sponsored and featured listings are basically advertising.
Full market comparison? Mozo and InfoChoice’s full tables cover a large portion of the products available. RateCity’s compare tables had a few omissions, such as ING’s Orange Everyday from the transaction accounts table (runner up in this year's CHOICE awards for best low-fee transaction account). But there are many more comparison sites out there showing a highly limited number of products. And all sites miss some occasionally, so it’s good to check a variety of sources to get the full picture.
Getting the full picture
There are obvious limitations to the information these sites provide, and each site we looked at points this out in the terms and conditions. You still need to have a basic understanding of the financial products you are viewing and how you want to use them. This may be simple enough in some cases (like a transaction account), but for home loans, the stakes are a lot higher. You should always take the time to get personalised advice if you’re unsure.
A force for good
Recent activity in the banking sector has shown people are becoming motivated to find a better deal. However, the time and the effort involved prevent many from acting. There’s no doubt the confusing nature of some areas of finance is also part of the equation.
Using finance comparison websites, people can overcome many of these barriers and uncover deals they may have otherwise missed. Comparison website operators even argue that providers themselves are striving to keep their products literally at the top of the table. “Comparison websites give the industry an incentive to provide a better deal,” says RateCity CEO Damien Smith.
Looking at UBank’s USaver’s promise to provide a leading standard interest rate, it shows at the least that top providers know their customers are watching the market. With the right knowledge there is no reason why consumers can’t drive better deals and a fairer financial market with tools like finance comparison websites.
CHOICE has called for the websites to continue improving transparency and table disclaimers, and it’s crucial for comparison website users to understand that financial knowledge is still needed when considering new products. It’s always a good idea to check out the full tables that allow you to compare all products.