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By Jason Stipp | 04-16-2009 12:00 PM

Are You Leaving Money on the Table?

Morningstar interviews Peter Pham, CEO of BillShrink.com, for insights into cutting your credit-card costs.

Jason Stipp: I'm Jason Stipp with Morningstar. If you're like most families, cost-cutting is probably at the top of your agenda over the last few months. But it can be difficult to know exactly how much you could be saving and how much money you could be leaving on the table with a couple of your biggest bills in the household, cell phones and also your credit cards. Here with me to help sort through how you can actually get some savings on these cell phones and credits cards is Peter Pham. He's CEO of BillShrink.com. It's a database that can build a personalized plan for you to save money in these areas.

Thanks for joining me, Peter.

Peter Pham: Thanks for having me.

Stipp: With credit cards, you found some interesting information about how people are leaving money on the table because they're not in the right credit card. What is it that people aren't getting the value out of their credit cards that they might think?

Pham: People sign up for credit cards for different reasons, and typically it's not for the right reasons. The right reasons are how do you use that specific credit card? If you don't pay off your credit card balance every month, don't go get a points rewards card. Instead, look at how much are you spending, how much are you actually paying off, and what is the balance that you have, and understand the true costs of having a credit card.

So, what we do on our site is we ask those specific questions. We show you what is your current card costing you, and what are the alternatives out there? On average, we're saving people about $1000.

On the flip side, if you're paying your credit card off every month, depending on how much you spend, what the categories you're spending them on - airfare, hotels, restaurants, et cetera - there's a tremendous amount of different combinations of how you earn points.

Then you look at all the credit cards out there and how you can actually redeem points. What we've done is broken all that down into real dollar amounts, very personalized results on what credit card is right for you.

If you're paying your credit card every month, the credit card company should be paying you. On average there, people are leaving about $1000 on the table a year on rewards that they're just not getting because they're on the wrong credit card.

Stipp: Where are you getting all of your credit card data? How are you pulling that in, and how are you going out and finding all of these facts? There could be thousands of pieces of data on these consumer cards.

Pham: Millions of points, both on credit cards and cell phone plans, actually. It's aggregating off of the Internet, off the websites of the issuers from the carriers. We're also getting direct data feeds from some of them as well, putting that all together into one site, normalizing the data to get technical, and putting it into the system, a recommendation engine, so that we can match your actual usage profile with the exact product that fits you.

Stipp: Taking a step back, there is a certain bill of rights for credit cards now, and your website helps people also find cards that may be more compliant with that bill of rights. What are some of the top-line points that you guys are looking at for good cards for people with respect to that policy?

Pham: We're tracking the Credit Card Bill of Rights, which was passed through the Federal Reserve a couple months ago. It goes into law in 2010. There are things like double-cycle billing where if you didn't pay off your balance two months ago but did this month, they're still going to charge you average interest rate over two months. Things around what your grace period should be; it should be a minimum of 25 days, for example.

What we're doing on our site is we're tracking all the bill of rights, and which cards are compliant, and which rules they're being compliant upon. So, as you look through the credit cards and understand is this one for you, we definitely recommend you looking at the bill of rights and seeing which ones are much more consumer-friendly versus the other ones.

Stipp: I think the silver lining here is that you can still maintain some of your own personal patterns, your own spending patterns. There still could be money to save there without having to cut too deeply. It sounds like your website can help some.

Pham: About $1500 a year on our website between cell phones, credit cards, and gas.

Stipp: Great. Well, thanks for joining me today, Peter.

Pham: Thank you.

Stipp: From Morningstar, I'm Jason Stipp. Thanks for watching.

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