WSJ out with article earlier this week about inherent conflicts of interest with credit card comparison sites.  When your largest source of revenue comes from the products you are trying to compare, you better have a Chinese wall between advertising and editorial.  Well, surprise, surprise, that Chinese Wall disappears when revenue pressures hit.  

Over the past year, the mutually beneficial relationship between a number of card issuers and comparison sites has turned icy, with heated conversations between the parties, banks cutting off ties with some sites and, in one case, a lawsuit.  Interviews with a dozen card-comparison sites reveal that as card-issuer pressure ramps up—with increased requests for sites to delete or change some information—most sites are giving in to their demands.

This article can be a great jumping off point to developing the financial and media savvy skills necessary to navigate our financial lives.  In case, you naively thought that these sites were impartial, the WSJ research found the following (bold type is my own):  

These sites are beholden to the card issuers for revenue. At least six of the 19 most well-known sites show credit cards only from lenders. Another six show mostly advertiser cards, and those credit cards receive preferential treatment, often showing up first on searches or in editors’ best picks. Some of these sites also provide additional services beyond credit-card comparison tools, such as bank account comparison options and credit-monitoring tools. Some sites receive a small portion of their ad revenue from banner ads from lenders and nonlenders. The sites don’t charge consumers for their card-comparison services.

So, should consumers shy entirely away from them or are there some white knight, objective sources out there?  The article provides a clue about one:

CardHub.com and its partner site WalletHub.com are among the few websites without an advertising relationship with First Premier that display its interest rate and fees. Of the more than 1,200 credit cards that CardHub lists, fewer than 10% are from advertisers.

Consumer Action did a thorough research report on the card comparison sites in 2012 (it would be great to see an update:).  They rated the sites based on a number of factors:  

Explanation of assessment criteria
A. Intuitive user interface and search filters. Uncluttered, easy-to-read user interfaces, with simple-to-find searches.
B. Results from a variety of issuers. We did three sample searches to see what popped up across the sites.
C. Ability to search anonymously. Allow users to search for credit cards without creating a profile, username or submitting an email address.
D. Unbiased educational information and advice.
E. Side-by-side comparison of fees and rates for several select cards.
F. Search filters to allow consumers to narrow their search by credit score, rewards options, 0% balance transfer or cash back cards.
G. Personalized reviews posted by users allow visitors to gain insight from consumers who’ve applied for or used a card.
H. Current and up-to-date card information.
I. Credit card debt repayment calculators and other interactive tools to help consumers assess the impact of interest rates and minimum payments on card debt.

What’s missing?  Yes, you guessed it, the level of objectivity in their results (which by the way can be a hard thing to measure when it comes to credit cards).  However, they did find that 13 of the 54 sites met almost all of their criteria.  

Activity idea alert!!!  

1. Students select three comparison websites on the short list from the Consumer Union report.
2. Go to each site and search for a credit card that meets their needs (as a student).  
3. Print out the results from each of the sites (only the top 3-5 cards).
4. Compare the cards recommended by each site.
5. Reflect on why the sites may have come up with different answers to the same question.  Have them “read the fine print” to understand the financial arrangements between the sites and credit card issuers.  
6. Find three articles from reliable sources about “best credit cards for students” and list the cards mentioned in the articles.  Is there overlap between the card comparison sites and the articles?  How did you identify reliable sources for the articles you found?  

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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