(MONEY Magazine) – Sure as Punxsutawney Phil appears each Groundhog Day, Intuit and Microsoft release upgrades of their personal-finance applications every year. And every year, Quicken and Microsoft Money arrive with enough hoopla to suggest that each program is a quantum leap from what has come before.

In reality, the new versions have delivered less and less innovation (and less and less product differentiation) in the past few years, making it increasingly difficult to justify the annual upgrade cost. And this year's releases, Quicken Deluxe 2001 and Microsoft Money 2001 Deluxe, are no different, offering only minimal improvements to their predecessors' already outstanding features.

Ironically, the area in which Intuit and Microsoft are making the greatest strides is in integrating the disks with their websites--both of which happen to offer some of the programs' best features free of charge. This leads to an inevitable question: Why buy an expensive application if you can get most of the features you want online for nothing?

While the websites are not (yet) perfect replacements for the disks--especially for dedicated users--many of the differences between the two types of products are vanishing quickly. (See the table below.)

This year, for example, Quicken has introduced an advanced checkbook balancer that roots out discrepancies between your Quicken ledger and your bank account. And the bill reminder is a better mnemonic than tying a string around your finger. Likewise, its new 401(k) adviser is like having a planner who tells you which funds to buy based on your goals.

Now look at Quicken.com. Do you need the checkbook balancer if you're downloading and storing transaction histories from your bank for free at Intuit's website? Probably not. The site's own bill manager not only reminds you when bills are due, but it (like the program itself) lets you pay them online too. As for retirement accounts, you can connect with a live adviser at Quicken.com who can answer the same types of 401(k) questions that the disk can.

MS Money, meanwhile, now features a cash-flow viewer that gives a graphical view of where your money comes in and goes out every month. Likewise, MS Money's new asset-allocation manager and improved portfolio tracker can help you analyze and tailor your investments to suit your situation.

Cut to MSN MoneyCentral. There's no cash-flow viewer yet, but Microsoft says there will be one sometime this year. MoneyCentral also lets you download and track all manner of investment portfolios, just like MS Money does. And despite MS Money's portfolio-tracker enhancements, MoneyCentral's may well be superior, offering more frequently updated data and richer research options.

So what should you do?

If you're a satisfied user of a recent version of either Quicken or MS Money, this year's batch of improvements doesn't warrant an upgrade. If, however, you're a new user interested in tracking your spending down to the last cent or keen on running detailed reports, you'll find the disks worth the price, as these are the areas in which they still excel (though there's no significant difference in quality between the two brands at this point; feel free to choose based on cost or other personal preference). Also, if you're more comfortable having your financial data reside on your computer as opposed to a remote server, one of the disks is still the way to go.

If, on the other hand, you simply want to keep better tabs on your finances, track your bank and brokerage accounts, and research investments (and you like the convenience of being able to access your finances from any computer), the websites are an attractive option destined to become even better.

--BRIAN L. CLARK brian_clark@moneymail.com