Which is better at saving you money on your cellphone (or credit card), BillShrink or Validas? Part I

Why do high schools still teach us trigonometry and calculus when the effect of compound interest, how to use Excel, and other aspects of consumer math are more useful for the vast majority of us?

Until that changes, there will be a huge need for consumer web sites like BillShrink.com and My Validas.

Both services aim to help you save money in the expensive minefield that is cellphone service. BillShrink also helps you find a credit card that gives you better rewards, whether airline miles, points, or cash back, for your type of spending.

I tried out both services this week, and came away with vastly different impressions. I review BillShrink below.

In Part II, I review My Validas. In Part III, I interview BillShrink's co-founder and head of product development, Samir Kothari.

BillShrink -- slick, ambitious, but flawed

BillShrink is a Silicon Valley-based, VC-funded startup that has gotten plenty of positive press from the TechCrunch crowd.

Its free Web site is easy to use and packed with features. For instance, enter your cellphone number and password and BillShrink will go to your carrier's Web site and download your most recent bill (the squeamish can enter estimates). Or type your home and work addresses and it will tell you how strong a particular carrier's signal is there.

The numerical analysis was detailed and easier to understand than simply reading your bill. For instance, you get to see what are the most popular phone numbers you call -- useful if you're considering T-Mobile's myFaves or similar promotions.

However, BillShrink only examines your most recent cellphone bill, rather than averaging your usage over the past several months or year. That is both inaccurate and baffling: I'd given BillShrink my user ID and password, so why didn't it download more of the many bills available at my carrier's Web site?

Also, BillShrink repeatedly lost my usage data, forcing me to re-select or re-upload it. This even happened inside the same login session.

More seriously, I found BillShrink overestimated the savings or bonuses I could earn by switching my cellphone or credit card, due to erroneous calculations and over-aggressive assumptions.

I have a BlackBerry with an unlimited voice/data plan. I used 7 MB of data last month to send and receive e-mails. BillShrink failed to take that into account, suggesting I could save up to $386 per year if I switched to a data-free plan at a different carrier.

My quick calculations showed that re-adding data would obliterate all savings. Even when I checked off the box indicating my sole interest in BlackBerry phones, BillShrink didn't get the hint.

Using BillShrink for credit cards was only a little better. I use a bank card connected with a popular regional airline that has one of the best frequent flyer programs remaining.

BillShrink didn't let me upload that data from the bank. Instead, I chose the card, estimated my monthly purchases, picked my top 3 spending categories, credit rating, and whether I paid off my bill each month.

BillShrink predicted I could earn an additional $2,773 over three years if I switched to the Chase Freedom Plus card. While I could get cash back, BillShrink recommended I redeem in miles to maximize their value.

The problem is the miles are only with United Airlines and British Airways. I actively avoid the former, and never fly the latter. And BillShrink doesn't let you exclude certain airlines or hotels.

I did another search, including only cards with my current bank. BillShrink suggested the platinum version of my current card, which it claimed would earn me an extra $1,410 over three years.

This seemed to be based on flawed assumptions. My top spending categories are restaurants, shopping and groceries. BillShrink appeared to assume a large percentage of my restaurant spend would be at restaurants linked to my card, for which I would receive 5 miles for every dollar spent.

But when I checked the list of participating restaurants in the greater Seattle area, I found only 72, none of which I had eaten at. As soon as I swapped restaurants for e-commerce, my additional 3-year earnings from going platinum fell to an extra $328.

BillShrink's overaggressive savings predictions may be no surprise, in light of its business model. With no fees or advertising, BillShrink only makes money when its users switch providers, earning it a referral fee from the new telco or bank.

I don't begrudge BillShrink's attempt to make a buck. And BillShrink does offer some useful number-crunching for motivated consumers. But for now, doublecheck its math and take any recommendations with a large grain of salt.

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Ever used BillShrink to try to save money or maximize your rewards? Or how did you go about finding the best cellphone or credit card?