Why It's Important To Do Your Financial Research

Posted in Debt Free In 30
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

comparison shopping research

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When shopping for financial products like mortgages, credit cards or GICs it's important to shop around. We spend time reading through reviews and prices for things like coffee makers, but as today's guest points out:

before buying a TV we look on Best Buy, we look on Amazon, we look online to find the lowest prices and comparison shop. And I think more people need to realize that they can also do that for financial products.

My guest today is Alyssa Furtado, founder and CEO of Ratehub.ca, a financial products comparison website. They help consumers compare products like credit cards, mortgages, banking and insurance services to help consumers make informed decisions regarding their financial situation.

Disclaimer: This is not a paid advertisement for Ratehub. The purpose of this episode is to educate listeners on the benefits of comparison shopping to avoid or prevent taking on unnecessary debt.

Researching The Best Rates

Getting the best deal often means getting the lowest rate. To find the lowest rate, you need to shop around. Rather than just accepting your bank's approval of a 3% mortgage interest rate, simply because you're loyal to that bank, put in the extra time to do your research and know for sure that what you're getting is the best deal for you and your finances.

Lenders are not your friends.

Although they offer deals and incentives for signing up or being a loyal customer, they're in the money making business. This isn't a shocking piece of information (or at least it shouldn't be), but it should put into perspective the importance of doing your due diligence when it comes to your own finances.

No one else is going to care about your finances as much as you do.

Alyssa explains that

in Canada, because we have the big 5 banks and we have this relationship directly with our banks, we often think it's easiest to just walk into the branch. And so, I think that that's an important step, but in addition, people need to research, empower themselves and comparison shop to find the best deals.

Which "Features" You Choose Depends On Your Financial Outlook

When it comes to buying a home, taking out a credit card, or opening up a GIC, you want the best rate possible to keep costs affordable. Alyssa explains that comparison shopping isn't limited to credit cards, and in fact, you can search based on criteria specific to your preferences and needs.

For example, the website lists lenders and banks and includes important information including:

  • mortgage pre-payment options;
  • specific rates based on the size of your down payment;
  • rates ranked lowest to highest;
  • lender criteria (for those who may not qualify with traditional lenders);
  • interest amounts; and
  • reward programs.

Everyone's financial situation is different and requires different things to avoid taking on debt, saving for the future or to live within their means. Whatever features you choose should depend on where you're at with your finances and what your financial goals are for the product you're looking to sign up with. Alyssa suggests that consumers

think about how likely [you are] to use that feature, and is it important to you when you're doing your comparisons.

Know Your Spending Behaviours

If you're someone who pays their bill on time and never racks up interest charges, a high interest credit card that boasts tangible rewards may be fine for you. However, if you're barely making the minimum payments, often fall behind on your payments and interest charges are increasing the size of your bill, you may want to forego reward systems in place of lower interest rates.

Moreover, if you're deep in debt and need to limit your use of credit, it's important to know which financial products can help you on your path toward becoming debt free. For example, secured credit cards offer those with bad credit  or no credit (i.e. new Canadians) the ability to make online-only purchases or book hotel rooms safely, without worrying that you're racking up debt.

Listen to the full podcast, or read the transcript for for more information about:

  • Mortgage rate comparisons;
  • Credit card comparisons;
  • GIC comparisons;
  • How comparison sites like Ratehub get paid;
  • CDIC Insurance; and
  • Why it's important to continue to shop around, even after you've signed on the dotted line.

Resources Mentioned in the Show:

About J. Douglas Hoyes

Doug is our co-founder and is a Licensed Insolvency Trustee, Consumer Proposal Administrator, certified Insolvency Counsellor and Chartered Professional Accountant.

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