Whenever we solicit financial advice from experts — whether to find out how to get the cheapest auto insurance rates, or what you need to consider before buying a pre-construction condo — there’s one piece of advice that they’ll always, always give us: do your research.
How well do Canadians heed that time-honored piece of wisdom? To find out, we conducted a survey last week.
We asked Canadians about the amount of time they spend researching financial products — like auto insurance, mortgages, and credit cards. A large chunk of Canadians responded “no time at all”.
Of the people we polled who currently have an auto insurance policy, 37% said that they spent absolutely no time trying to find out if they could get a cheaper rate elsewhere. Of the people who have mortgages, 24% said that they didn’t research alternative options. And as for people who have credit cards? That number comes in at 42%.
Of those that did do research, very few spent significant amounts of time comparing their options. For instance, in all categories, more people spent between 30 to 60 minutes than two hours or more.
Browsing Youtube and watching the World Cup
More people spend up to 30 minutes a day watching YouTube videos than those that compare rates before making a major purchase. Also, 19% of respondents said they spent more than two hours a week watching the World Cup, but only 9% reported spending the same amount of time — in total — researching credit card options, and only 12% said that they spent a similar amount of time comparing auto insurance rates.
People also tend to spend more time on social media than they do deliberating over their financial decisions. 12% of respondents said that they spent between two to four hours on Facebook each week, while only 11% said they spent that amount of time looking for better mortgages rates. (Only 6% of respondents spent that much time researching auto insurance options; that number stood at 4% for credit cards.)
Canadians in lower income brackets were the least likely to compare rates. 44% of respondents with household incomes of less than $50,000 a year said they didn’t spend any time comparing car insurance rates, while 37% said they spent no time researching mortgages.
Lack of research costing Canadians money
According to the Canada Real Estate Association, the average home price in Canada is $491,000. A buyer who puts 5% down and gets a fixed-rate mortgage of 3.04% would pay $2,306 a month on that amount.
This is where the value of comparing comes in. Buyers who compare mortgages get the most competitive rates. If that buyer was offered a 3.29% mortgage instead — a mere 0.25 percentage point increase — they would pay $2,369 instead.
That’s $63 a month more, or $756 more a year.
And that’s for the average home in Canada. In cities such as Toronto or Vancouver, where the average home costs twice as much, buyers who don’t compare are losing out on thousands of dollars a year.
We’re not here to shame you. Research — especially when you’re probably using something as vast and unwieldy as the Internet to do it — can be overwhelming. If you’re not a financial expert, how do you know what’s a good deal and what’s not?
Our preferred strategy is to compare. That’s why we offer an easy way to compare auto insurance, home insurance, mortgage, and credit card deals on the Canadian market. You can use our site, but there are plenty of other comparison tools out there — and most of them are free of charge.