Price comparison websites leave people confused
Price comparison websites have been accused of offering inconsistent results, leaving many people confused about what the best deal is for them.
Consumer watchdog, Which?, says using a single comparison website is not enough to ensure you get the full picture of the market. It checked the three largest price comparison websites (moneysupermarket.com, gocompare.com and confused.com) for various different insurance and credit products, and found in the majority of case the cheapest quote differed between sites.
For example, the cheapest home contents insurance varied from £51 on Gocompare.com to £71 on Confused.com, while the cheapest standard-rate credit card varied from 6.8% APR on moneysupermarket.com to 12.9% APR on gocompare.com.
It found that making true comparisons between products is also leaving consumers perplexed, as different websites ask different questions and show different product features.
And Which? reports that in some cases consumers could get a cheaper quote by contacting the insurer directly.
Martyn Hocking, editor of Which? Money, says the three main comparison websites don’t offer people enough information to allow them to make an informed choice.
He adds: “You need to use two or three comparison sites and check directly with providers to get the best quote, and remember that cheapest isn’t always best – it’s a false economy if you don’t get enough cover for your needs or have to pay a huge excess if you claim.”
Earlier this year the Financial Services Authority launched an investigation into insurance price comparison websites amid fears that they leave people more confused. It found that not all websites provide users with clear information.
Price comparison websites have defended their services in light of the Which? report.
Carlton Hood, chief executive of confused.com, queries the accuracy of the research, and adds: “Which? seems to have overlooked the benefits which price comparison sites have brought to a traditionally complex market.”
Stuart Glendinning, managing director of moneysupermarket.com, agrees. "This is not a comprehensive report from Which? on price comparison sites,” he says.
Moneywise offers users a free Compare and Buy service for insurance products, savings, ISAs, credit cards and loans. We aim to offer you a selection of the best deals on the market, with enough information provided to enable you to make an informed choice.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.