Compare and save money, but know what you are looking at

They can be great tools that help deliver huge savings on financial products, but comparison websites want to make money too.

Comparing prices of financial products can potentially save consumers thousands of dollars a year, sometimes with just a few keyboard clicks, but there may be traps lurking.

Dozens of free comparison websites operate in Australia and allow people to search for deals across home loans, bank accounts, insurance, energy providers, phone and internet plans, travel, superannuation and more.

Finance and budgeting specialists say they can be a good tool for saving money, but warn people to understand that most are commercial operators out to make money themselves.

It’s wise to visit a few different comparison sites for each financial product to get a clearer view, they say.

MyBudget director Tammy Barton says the top suggestion on a comparison website may not be the best option.

SPONSORED LINKS

“Comparison websites are free for the consumer to use but in addition to receiving commission, they may also receive revenue from having sponsored products or services listed at the very top,” she says.

“In addition, some comparison websites may also feature advertised products that promote special promotions or offers, for example a $200 voucher upon sign-up. Don’t be sucked into the shiny bells and whistles – your goal is to get the best deal available.”

MyBudget founder Tammy Barton says it’s not just about saving money. Picture: Brenton Edwards

Barton says many comparison sites will ask you to accept their terms of service, “which will almost always include their contact centre calling you”.

“In return for using their tools, you must hand over your contact details. A driving reason for this is so the comparison site can earn their commissions from the retailer.

“Don’t forget you can also spend the time comparing yourself. After a few phone calls, it’s pretty easy to work out which provider will give you the best valued product.

“Remember that it’s not just about saving money, it’s about getting good value for money too. The cheapest product may not always be the most suitable product.”

Some sectors have government comparison websites, such as privatehealth.gov.au for health insurance and energymadeeasy.gov.au for electricity and gas, but most are commercial operators.

RESEARCH IS VITAL

Big and popular sites include Finder.com.au, iSelect.com.au, Canstar.com.au, RateCity.com.au, Comparethemarket.com.au and Whistleout.com.au.

Money coach Karen Eley says it is always a good idea to research big purchases, insurance and other financial products, and comparison sites are a helpful start to decision-making.

“Some comparison sites will rate or recommend certain companies, so do your research to see if there may be biases or conflicts of interest if the sites are paid for higher ratings,” she says.

Eley says conflicts must be outlined in the companies’ financial disclosure statements found on their websites.

“Ideally use multiple websites when doing your research,” she says.

“I actually used a site a few months ago to review my private health cover and got bombarded with emails and phone calls by different providers. Be prepared to have several sales calls as a result of using these websites.”

Tribeca Financial chief executive officer Ryan Watson says the key is to understand the product you are reviewing, and any hidden detail behind the cost savings and benefits.

“Make sure you are comparing oranges with oranges,” he says.

“It can be all too easy with comparison websites to look at the potential financial saving, without recognising potential lost benefits and the actual real amount of money – or not – that you might be saving.

“It is always prudent to do at least a little bit of research yourself, if only to have at least an understanding of the products you are looking to purchase.”

Tribeca Financial’s Ryan Watson says compare “oranges with oranges”. Picture: Supplied.

KEEP THIS IN MIND

• Comparison websites are businesses that make money in different ways including sponsored links, commissions paid by providers, and showing sponsored links before non-sponsored links.

• Ratings and rankings are not always clearly explained, so compare on other sites too.

• Most comparison sites do not cover everything that is available.

• Price is not always the most important factor – compare all the features that are relevant to you.

Source: Moneysmart.gov.au

Originally published as Compare and save money, but know what you are looking at