This study addresses two questions for financial consumers:
• Is it worthwhile to shop more than one financial institution to get the best price?
• Should the choice of institutions among which to shop be influenced by whether an institution is a credit union or a bank?
The first question is critical. Comparing prices takes time and effort. In this study we found that standard "rate sheets", whether on paper or a web site, were often incomplete or unclear about products offered by a financial institution. The reliability of phone information depended on who responded to calls and what questions we asked about products. We found that obtaining reliable information upon which to compare prices between products with like characteristics often took three phone calls to an institution, spaced over several weeks. Little wonder that other studies have found consumers are reluctant to shop for some financial products.
What is this research about?
The study examines price data on five commonly used financial services from six credit unions and six banks in each of three markets. The prices used for comparisons are for products and balance levels commonly held by middle-American households: savings accounts, one-year certificates of deposit, credit cards, unsecured signature loans, and used car loans.
What are the credit union implications?
A consistent finding for the three markets is that consumers should shop around for savings and loan products. The fewer institutions shopped, the more advisable it is to concentrate the search at credit unions. If more institutions are shopped, some banks should be included.
These results reflect pricing in the three markets we studied, comparing prices on comparable products, one product at a time. We believe the results of the study have significant implications for consumer shopping strategies in these three markets.