Why aren’t Canadians saving money with comparison sites?
Comparison sites have been around a long time; you’ve almost certainly used some yourself. Have you ever searched for a trip on Expedia or Kayak? I do it all the time, you can usually save a few hundred dollars on trips you’re planning. They’re also great research tools to help plan and budget your trips.
Have you ever bought anything on Amazon or eBay? Me too! You’d be foolish to buy something online and not consult these sites for price comparisons. You’d also be foolish to not check a site like Ebates to get an even further discount on your trips or products or money back.
While the above-mentioned sites work great for 90% of our purchasing. They unfortunately don’t help us with big ticket items like insurance and mortgages. Insurance typically is worth thousands of dollars and mortgages are often in the hundreds of thousands. You can save more on these than you would on almost any other purchase, besides the houses and cars themselves. Apparently, Canadians just don’t do this. According to a recent study by LowestRates.ca only 8% of respondents used a comparison site to source their most recent mortgage! WHAT?!?
Why would no one use these financial comparison sites?
I was pretty shocked to hear the stats were this low. I’ve always used comparison sites like Expedia and Amazon for travel and general goods. So, when it came time for me to insure my first car, of course I looked for something similar. After all, I grew up hearing all about certain US insurers giving you rate quotes from other companies to prove they’re the lowest, so why wouldn’t I look for something similar in Canada?
My first mortgage was worth nearly $300,000. Saving 0.5% on this would save me tens of thousands of dollars throughout the lifetime of the mortgage. Typically, people make financial choices like this every day and spend less time thinking about it than they do planning a vacation. A well planned and researched vacation may save a few hundred up to maybe a thousand for a large family. A well planned and researched mortgage will save you that entire vacation over it’s lifetime! BOOM! FREE VACATION! Thank me later or feel free to take me with you, I’m tons of fun despite what you may think from this website!
After speaking to some friends and family about these sites and the stats from the survey I think it comes down to three main reasons. The first one is addressed in the study, which could be slightly biased, but let’s look at the others after that.
1 – People trust big banks
Most big banks have been around for centuries and people trust them. It’s not hard to believe that people have blind faith in banks. Your parents probably started a bank account for you when you were really young and that’s probably at the bank your grandparents used. You probably never really saw a need to switch banks because “they’re all the same” or some other preconceived notion that keeps you loyal.
I think because of the image banks have cultivated for themselves, and their brand loyalty, they’ve managed to get people to forget that banks are for profit businesses. With any for profit business, the number one goal is to make money for the shareholders. Making money for shareholders always comes above customer needs. Yes, they’ll provide you with a service you need but not at the cost of profitability. It’s because of this I think people just go to their banks for any financial needs. This blind/brand loyalty is what allows the banks to have higher rates than smaller companies.
2 – People are intimidated by their finances and would rather speak to someone in person
Some people probably know about the financial comparison sites and don’t trust themselves or these websites. A lot of people are just more comfortable having someone sell them a product. They might know it costs slightly more, but that face to face advice is what’s worth it to them. Personally, I love being able to deal with someone face to face. It gives me slightly more confidence that they know what they’re speaking of if they can answer questions confidently in person. That’s one of the reasons after I used the mortgage rate comparison tools I set up a meeting with the company with the lowest rate before going forward with them.
3 – People just might not know about financial comparison sites
Then of course there’s the complete possibility that some less tech savvy people might not even know about these rate comparison sites. I’d guess this would be with the older generations that didn’t grow up on computers. I certainly trust that the majority of millennials know of these sites. For all of the millennials reading this, please go out of your way right now to help your parents, aunts, uncles, cousins, grandparents and share this article to them know about the following sites. These will help them save thousands of dollars over the remainder of their lives.
If anyone reading this has some additional international sites I should add please let me know so we can help everyone save some money. Thanks!
It’s not hard to believe the above reasons but sharing this page will help everyone.
I don’t know where you might fall on the spectrum, but I hope this information helps you and your family save thousands on your next major financial purchase. As always, I’d love to hear your thoughts in the comments or you if have any questions you want to ask in private use the Contact Page.