7 ways to make the most of comparison sites

Shopping around is a smart strategy. Would you buy the first chocolate bar you saw? No. You’d buy six different kinds and “try” them all.

But a home loan, credit card or bank account is not a candy bar. Before you commit, you need to know what else is around. You want to be able to compare like-for-like on criteria like interest rates, loan terms, repayment options and fees and charges.

The trouble is, with so many providers, choosing can be really hard, and you’ve got trivia nights to get to. That’s where product comparison sites like Finder, Mozo, Rate City and Infochoice come in. and compare.

In fact, the ACCC – our consumer watchdog – found they gather the information for you, so you can simply click through are some key benefits to comparison websites:

• Simplifying the process of comparing products;
• Helping us make an informed choice;
• Solving the problem of an information overload; and
• Increasing competition to help push prices down.

But they’re not foolproof. Check out our seven tips to make the most of what they offer and avoid comparison site traps.

1. Share the love – compare product prices across multiple sites.

No single comparison site covers every provider or product. To make sure you get a really good cross-section, visit a number of comparison sites before settling for a particular product. Just like the products themselves, there are good and bad comparison sites, and it’s good to try a variety.

It only takes a few minutes to cast your net wide. You could find a hidden gem on a site that’s not top of your list.

2. Beware of paid promotions.

Comparison sites are not charities. Just like social media and search engines, these sites make money from advertisers.

One option is to let providers pay to have their product in the spotlight. They might be singled out as “pick of the day” or be given a high rank among the listings – but it’s not because they earned it.

You need to find out for yourself how good the product is. Opt out of the function that favours sponsored listings to see an unbiased ranking of the most competitive products.

Even if “top picks” aren’t paid promotions, you have no way of knowing the criteria the site uses. Always make a decision based on the facts, and your own research.

3. Sort by criteria that’s relevant to your needs.

Comparison sites rank products according to a particular default setting. Home loans, for instance, are typically ranked by the headline interest rate, but that may not show how much you’ll pay over the life of the loan. The option that ranks loans by their comparison rate incorporates most upfront and ongoing fees, for a more accurate picture.

To compare term deposits, check that the default value of funds invested – and the savings term – match your own situation. It’s a similar story if you’re looking for the best credit card deals. The default sorting setting could be the card’s annual fee, which might be way down your list of criteria. It could work for someone who clears their card in full each month, but sorting by interest rate could help you find the right credit card to pay off a large balance faster.

Whether you want to know how to save money or how to stop spending it, being clever about sorting is a great place to start.

4. Watch out for the “gotchyas”.

Plenty of financial products offer short term sweeteners like introductory rates and honeymoon deals, which can push them to the top of the rankings. Scratch the surface of these deals though, and it can all look a bit meh.

Bonus rates on savings accounts, for example, can seem like a good way to get to your overseas holiday sooner, but they typically only apply for a few months. Transferring to a 0% credit card definitely appeals, but is there a high revert rate hiding in the full comparison listing?

Don’t take top-ranked products at face value. Make sure you dive into the fine print.

5. Remember, price isn’t everything.

Comparison sites make it easy to focus on numbers – like the rate, the fees or the term. The thing is, features matter too. Getting the right product for you is rarely as simple as choosing the best price.

When you’ve narrowed down to a short list, use the site’s ‘compare’ function for a side-by-side look at the features on offer. Do you need the option to pay out early? Is a monthly account-keeping fee a deal-breaker for you? This is your chance to be choosy.

Follow up by visiting the bank’s website to read the fine print before making a final decision. Good value for money is all about finding right mix of features and flexibility at the right price.

6. Check the reviews.

A deal that’s good on paper can come totally unravelled if the customer experience sucks. What’s great about comparison sites is seeing how others have fared.

Before you sign up, check what sort of customer experience others have enjoyed with a particular bank. Not one or two. Not even five. A dozen or more first-hand accounts will give you the most accurate picture.

7. Check now. Then check again later.

Financial products can totally stagnate. What suited you five years ago might not be the right choice for you now. Actually, sticking with the same products can mean wasting money.

Make a habit of regularly browsing comparison sites to see what’s around. Banks continually improve their products and change pricing, so it’s worth staying on top of the latest deals.

Price comparison sites offer plenty of pluses. Make your research a little event: grab some snacks, jump on a range of sites and really get cosy with comparing.

As long as you use the information wisely, you can enjoy the best from every column – a great deal with savings on time and money, the confidence of knowing you have the right financial product for your needs, and time to spare.