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Updated on Thursday, September 11, 2014
The Wall Street Journal recently published an article pointing out that “Credit Card Comparison Sites Come Under Fire.” They point out some of the worst practices of the US price comparison business. Namely:
- Most price comparison sites will only show products that pay them a commission
- These sites aren’t displaying the best cards first, they often display the cards that pay the highest commission first
- Rather than writing honest and open reviews about the products, the websites often let the banks dictate how to describe a product
In 2013, I was living in London, where I ran the largest credit card business in the UK. (To quote personal finance expert Clark Howard, I controlled the small dinosaur brain of a large monster bank). While living in the UK, I was inspired by a price comparison industry that worked to a different standard. ?Personal Finance journalist Martin Lewis created www.moneysavingexpert.com, which followed some simple rules:
- A price comparison website should review all products, not just those that pay commissions
- Products should be ranked based upon the value for the consumer, not the commission from the bank
- A bank could never control editorial content.
I witnessed a movement in the UK, led by Martin Lewis and a new breed of unbiased and transparent UK price comparison businesses that held themselves to a higher standard.? These sites found ways to make money without selling their souls to the banks and misleading the consumer for profit. I reflected on how much we needed this in the US. I was amazed at how low the standards had become in America. I had become increasingly restless, and realized that my purpose was to start working on the side of the consumer and ignite a pro-consumer movement in the US.
So, I quit my job, moved to New York, and set up MagnifyMoney.com with my best friend from college.
We live by the values of the UK industry. We have reviewed over 3,000 products, and will continue to expand our product database, regardless of whether or not we receive a commission. And we will always rank products based upon the best value to the consumer, not the commission that we could receive.
At MagnifyMoney, we believe that Americans:
- Pay far too much interest on credit card debt
- Pay far too many fees on basic banking accounts
- Don’t earn enough interest on their savings accounts
- Could fix all of this, if an honest price comparison website made it easy to compare the best offers and receive personalized results
For years, it was easy for banks to charge hidden fees and high interest rates. Finding the actual cost of a product required pouring through the fine print. Understanding the tricks and traps required a law degree. Comparing rival offers between banks would take hours of research. And, switching banks was a painful process.
Technology has changed all of that. The MagnifyMoney team used our expertise to create tools that make it easy for people to compare, switch and save. Even more importantly, the digital marketplace we built makes it easy for small challengers with more perks and fewer fees (like credit unions) to stand out.
I mentioned Clark Howard earlier in this post. Since returning to the US, I’ve discovered his radio show and applaud his mission. He regularly talks about the giant monster mega-banks. And, I am impressed that for someone who has never worked inside one of them, he certainly has done a great job figuring out how they work! But, more than that, you know that Clark’s integrity is beyond reproach. He cares about his listeners, he will never sell out to large organizations. You could never imagine Clark reading a script written by a bank, or recommending a product because he was paid to do it. We need to bring the standard of Clark Howard’s integrity to the price comparison business.
I am thrilled that the Wall Street Journal covered this story. I am thrilled that Clark Howard talked about it, to raise awareness. I believe American consumers deserve to know how products are being recommended, and they deserve better.
I hope that this story gets told more often. And I hope that MagnifyMoney can help raise the bar, creating an industry that Americans can rely upon to cut their costs and fight in their corner.