Shop around when borrowing.

Four out of five Americans fail to shop around when they borrow money, according to an Ohio State University study. "People would never think of buying the first refrigerator or television that they see, but they don't apply the same principles to their search for credit," indicates Sherman Hanna, chairman of the Department of Family Resource Management. "Most people will contact just one lender when they need a personal loan, not realizing they could possibly save a significant amount of money if they were more selective."

Hanna and doctoral student Regina Chang analyzed the behavior of 574 consumers who had borrowed more than $500 the previous year. They found that only 20% of those surveyed tried to obtain comparative information on creditors or credit terms before taking out their loans.

Education was the most important factor related to comparative shopping for loans. Consumers with a college degree were three times more likely to shop for a loan than those without a high school diploma, after factors such as income and size of loan were taken into account.

The middle-income consumers were about twice as likely to shop for a loan as otherwise comparable low- or high-income ones. Lower-income consumers may search less because they fear rejection, while higher-income...