Price comparison sites do exactly what their name implies: compare the price of goods and services from a range of companies.
This allows you to make sure you get a deal that's tailored to you at the best price.
However, finding the best deal isn't always as simple as it sounds.
Here, we explain how price comparison sites work, how to use them effectively and the pitfalls to watch out for.
What are price comparison sites?
Price comparison sites exist for a whole host of consumer items, but the most well-known tend to specialise in financial products such as insurance, credit cards, personal loans and energy tariffs.
These websites are allow you to get quotes from a variety of firms in a single stroke. This means you can make quick enquiries about what's on offer across the market without having to fill in multiple sets of forms with different companies.
The Which? comparison website, Money Compare, lets you search hundreds of deals from providers large and small in the credit card, mortgage and savings markets, helping you choose a great deal based on the quality of service, as well as cost and benefits.
Find out more: Which? Money Compare - hundreds of deals compared
Using a price comparison website: the basics
Some price comparison sites allow you to search for products via simple 'best buy' tables. Others ask you questions about your preferences and for personal details, and then provide you with personalised results.
Personal loans and credit cards, for example, can be quickly compared on screen. However, to get car, home and travel insurance rates, you'll need to disclose more information, as these are priced in accordance with your individual circumstances.
When you're browsing for car insurance quotes, you’ll be asked for your age, address, occupation and driving history - all of which can affect the cost of cover. You’ll also have to supply information about your car and who is driving it.
Details about your home and personal belongings will be needed when searching home insurance quotes. You'll need details of your journey and medical history when shopping for travel insurance.
It might take 10-15 minutes to supply a price comparison website with the information necessary to give you dozens of quotations for these financial products.
How to use price comparison sites effectively
Use a selection of price comparison sites
No single price comparison site trawls the entire market for the very best financial products in every category, so it’s best to search several websites before choosing which product to take out.
Also, be aware that some financial product providers choose not to be featured on any price comparison sites. The likes of Direct Line and Aviva won't be included in any comparison site search results, even if they might offer the most suitable deals for you.
To compare products from companies that don't subscribe to comparison sites, you'll have to get quotes from them directly. This shouldn't take more than a few minutes per firm, and could be well worth the effort.
Although it takes more time to browse several comparison sites and check what 'standalone' companies have to offer, this is the best way to ensure you find the most suitable deal.
Double-check your preferences
The amount of excess (a sum of money you pay towards your insurance claim) you set for your insurance policy or choosing whether to pay your premiums monthly or annually can have a huge impact on the quotes you are offered.
Always check that these details are appropriate, and if you’re happy to increase your excess or pay for an insurance policy in one annual lump sum, you could be offered a better deal.
Consider quality as well as cost
Price comparison websites are set up to find the cheapest deals for financial products, but these may not always provide the level of cover or the standard of customer service you would expect.
Quality is as important as cost, so focus on getting value for money – not the cheapest deals – when you buy financial products.
Low-cost insurance policies, for instance, are unlikely to include perks such as a replacement hire car in the case of an accident. In a tight spot, you might appreciate benefits like this even if they cost a little more.
We've assessed dozens of car insurance and home insurance policies based on the quality of the cover as well as price. Our reviews also rate insurers on a range of other important factors such as customer service, claims handling and transparency of charges, to ensure you find the best deal for your needs.
Price comparison sites: pitfalls to watch out for
Watch out for assumptions and pre-ticked boxes
It's not unusual for a comparison site to assume you don't have a criminal record and pre-tick a box stating you have no convictions. If you have been convicted of an offence in the past and don't untick the box yourself, you could be left with an insurance policy that won't pay out when you need it to.
Also, be aware of price comparison sites making assumptions about your circumstances when you visit them for a quote.
For example, if your home has a thatched roof or you live on a flood plain, you'll have to provide the website with this specific information when buying a home insurance policy. If you forget or can't find a way to do so, you could again be at risk of buying a policy you're not able to claim on.
If you've used a price comparison website and aren't completely confident that a certain deal is right for your circumstances, phone the product provider directly and check.
Make sure to check your excess
We’ve seen examples of price comparison websites that don’t ask for your excess preferences until after the results page has popped up. In some cases, no information on excesses was automatically displayed on the results page either.
Generally, setting your excess higher can reduce the price of your insurance premiums. Price comparison sites which automatically set a high excess artificially lower your premiums, making the rates you see even cheaper.
If you whizz past the quote page without realising you can tweak the results, you could therefore end up with a high excess you didn’t want or couldn't afford should you come to make a claim.
The cheapest deals don’t always rise to the top
Paying monthly rather than annually makes a huge difference. For car insurance, paying monthly can add up to 44%, and for home cover almost 50%.
The cheapest annual-payment policies aren’t necessarily the cheapest for paying monthly, yet we’ve seen examples of price comparison sites ranking car insurance based on the cost of annual payments, even when the user wanted to pay monthly.
Keep an eye out for unwanted extras
Free extras can make insurers stand out in a list of comparison site results, and they can be a perk – if you understand the deal.
However, we found policies with add-ons that were free for a year, then automatically renew at a cost to the customer, unless they specifically ask to cancel.
Even worse, we've also found seen examples of price comparison sites adding on extras at an additional cost to the consumer.
For example, we run searches for home insurance policies without personal possessions cover, only for certain websites to add this, at a cost of about £20 extra. We've also run home insurance quotes including a laptop we didn't want covered outside the home, only to spot policies that did include this cover, adding around £15 to the price.
In each case, when you clicked through to the insurer's website, you could remove add-ons by deselecting them, but we think consumers would prefer to actively opt in so it’s totally clear.