When you're comparing things like insurance, superannuation, credit cards and home loans, comparison websites can be helpful. But they have limitations and may not cover all your options.
How comparison websites work
Comparison websites are a convenient way to compare costs and features in one place. They can be a good starting point, but it's important to keep in mind how they work.
They make money
Comparison websites are businesses. They make money in different ways, for example:
- from sponsored links
- by showing sponsored links before non-sponsored links
- from commissions paid by providers
Comparison criteria is not always clear
Ratings and rankings on comparison websites are not always clearly explained.
Find out what they're based on and compare them with ratings and rankings on other comparison sites.
Not all products are covered
Most comparison sites don't cover everything that's available. They usually only cover certain providers and certain products.
While price is one feature to compare, it's not always the most important. Check if the website is comparing all the features that are important to you.
Be careful entering your personal details into a comparison website
Comparison websites can be used to generate leads for cold callers who target you with offers that may not be in your best interest. Cold callers are currently using high pressure sales tactics to get people to compare and switch super funds.
How to use comparison websites
Here's how to get the most from comparison websites:
Identify key features to compare - Before you start searching, work out what you want and what features you're going to compare. For example, fees, interest rates, exclusions.
Shop around - Look for other products or providers not listed on the comparison website by searching online or using consumer advocate websites (for example, Choice).
Make a short list - Identify your top results by using your key features list.
Get more detail - Compare the top one or two results by reading the fine print. Look at the product disclosure statement (PDS) or other information about the features and fees. Look for extra fees not covered in the initial comparison, and make sure the features you're comparing are similar.
Make an informed decision - When you've made your decision, contact the provider. Ask them as many questions as you need to until you feel ready to commit. If you're choosing a financial product, make sure the provider is licensed with ASIC.
For more tips on comparing loans, insurance and super funds, see:
Comparison websites and scammers
Be careful entering your details into a comparison website. Before you do, check who runs the website and that it's based in Australia. Scammers can set up fake comparison websites to capture your information and on-sell it to other scammers. See identity theft for more information.