How to use price comparison sites​

While these kind of websites can be helpful for tracking down the right deal for you, it pays to be a little bit wary before taking them at face value. Price comparison sites don’t charge you for using them, meaning they get the money they need to keep running from somewhere else. When a supplier signs up to a comparison site, they offer a commission to the site when they “generate leads” for the business – basically, when they attract customers for them. As a result, the sites really want you to keep coming back to them, meaning they have to keep finding you better and better deals.

Every time you visit a comparison site, the odds are you’ll find a better deal than the one you're on, whether you’re after a cheaper insurance quote or a less steep interest rate on a credit card. In fact, they’re so good at saving us money that we don’t ask nearly as many questions as we ought to. We just tend to assume that the sites are acting in an “unbiased” way, always keeping our best interests at heart. But, that’s really not quite true. Just like any other business, a price comparison site’s in it for the cash it can make, building up its profits and keeping its shareholders happy. Does that necessarily make them bad? Not at all! In fact, Moneysupermarket and GoCompare alone saved their users well over £3 billion last year. At the same time, though, they scored about £127 million in profits before tax, pouring £100 million of that directly into their shareholders’ pockets.

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But they’re still “impartial”, right? Well, maybe – but it’s worth remembering that they’ve got more interests to consider than just yours. Admiral, for example, is a co-owner of Confused.com – meaning they’re selling their own insurance through a comparison site they’re partly running. None of that automatically means they’re giving bad advice, of course, but you wouldn’t necessarily know there was a link when you were mulling over your options.

The big change that price comparison sites have made to the way we buy things like insurance and energy is in the holes they poke in the idea of “consumer loyalty”. The way things used to be, an insurer or energy supplier could more or less assume that its customers would stick with them year after year, even if they kept pumping up their prices. Now, though, the news of a good deal elsewhere travels fast, and customers will jump ship a lot more readily than they used to. The same goes for things like banks – and honestly, it’s not a bad thing. Easier access to information about other suppliers makes competition a lot more effective, and can easily lead to real benefits for buyers. The problem is, those benefits really only ever materialise if you keep checking out the alternatives year on year. That deal you were so excited about 5 years back might have lost a lot of its shine by now, lagging behind today’s competition and ramping up the costs over time.

Suppliers, meanwhile, are falling over themselves to bring their prices down so they look good on comparison sites – even offering deals at a loss to make sure they stand out from the crowd. Once you’re sucked in by that great initial offer, though, there’s every chance you’ll get “price-walked” into a much more expensive rate over a few years. There are some rules designed to prevent price-walking for vehicle and home insurers by making sure existing customers can’t be charged more than new ones. Of course, the knock-on effect of that is that insurers are becoming much less excited about offering cheaper “first-timer” deals.

The clue to understanding price comparison sites really is in the name. If you’re on the site, the chances are you’re looking for a good deal on cost. For a lot of people, that’s all they need to know to make a decision – which can actually cause a couple of problems. If you judge a deal purely by how much money it costs, there’s a strong possibility you’re going to walk away with a product that doesn’t offer everything you need. According to a 2016 report from the Financial Conduct Authority (FCA), there’s serious concern about the number of people ending up with insurance that simply doesn’t give them the coverage they think it does. A good deal doesn’t start and end with its price tag. You’ve got to be absolutely sure of what you’re getting for your cash – particularly with insurance, where you usually only realise you don’t have good cover when you try to make a claim.

Consumer group Which? also spoke up about its worries over people not getting what they thought they were paying for. They talked about a “picture of inconsistencies and a lack of real choice that could be leaving consumers at risk of purchasing policies that simply don’t meet their needs”. In fact, 6 out of 10 of the offers they checked from GoCompare, Comparethemarket, Confused and Moneysupermarket didn’t even match what people actually got when they bought them. Some made false promises of perks like courtesy cars, while others only really offered half the cover limit they claimed!

Here’s another thing people often don’t realise about price comparison sites: they don’t actually all show the same prices. A comparison site is a lot like a marketplace. Suppliers are laying out their stalls with their various offerings, but they’re not necessarily charging the same price at every market they set up in. Furthermore, while some businesses do have agreements with comparison sites that say they won’t offer their products or services cheaper on a rival site, this actually works against the whole idea of competition.

Despite the cautions and drawbacks, a price comparison website can still be a great time and money saver – providing you’re prepared to sign up to several and compare them against one another. It sounds strange to have to compare the comparison sites themselves, but it’s still basically the only way to know if you’re getting the best deal you can. Yes, it’s super-convenient to have all the deals listed in one place – but if that’s the only place you’re checking then you’re really not getting the full picture of what’s out there. In fact, some firms—including heavyweights like Direct Line—actually pride themselves on the fact that they don’t appear on price comparison sites.

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