Credit Card Total Financial Value: What you need to know

Total Financial Value considers everything - benefits, fees, interest, etc - into one number.

Credit Card Total Financial Value
4 min read
Apr 19, 2024
Crunchly expert Bryan Halloy
Written by Bryan Halloy
The Total Financial Value is a number that represents the overall financial value of a credit card to you. It is calculated by considering all the benefits, fees, interest, and other factors of a credit card and then determining the net financial value of the card to you. The Total Financial Value is a key factor in determining the best credit cards for you. Looking at a card from this perspective is critical, as many cards can - for example - lure you in with a good sign-on-bonus but then lock you into a cycle of high fees that end up costing more than the rewards were worth. On the other hand, some cards that do have high annual fees can end up having low interest rates or valueable, useful perks and benefits, which can more than offset the high annual fee cost. That's why it's important to crunch all the numbers to understand the true value and cost of card based on how you plan to use it.

How is the Total Financial Value determined for each card?

To compute the Total Financial Value for each card, we combine the following calculated factors:

  • Intro Rewards Points / Cash Back Value: The value of the rewards points or cash back you can earn from the card's sign-up bonus (where applicable).
  • Everyday Rewards Points / Cash Back Value: The value of the rewards points or cash back you can earn from the card's everyday spending (where applicable).
  • Credits: The value of any statement credits you can earn from the card. For example, some cards offer reductions in balance, or statement credits, when spending in certain categories like airfare is reached.
  • Benefits and Perks Value: The estimated financial value of any benefits or perks you can earn from the card that you designate you would use or find useful. For example, some cards offer free checked bags, airport lounge access, or travel insurance. We estimate the value of each of these, where possible, and add them to the total financial valuation if you disgnate that you would use them. If the card offers a perk that you would not use, it is not included in the Total Financial Value.
  • Annual Fees: We subtract any annual fees, if the card has one.
  • Balance Transfer Fee: We subtract a balance transfer fee, if the card has one and if you plan to execute a balance transfer to the new card.
  • Balance Transfer Interest Savings: How much less in interest you would pay on your existing balance with the new card vs keeping the balance on your existing card (if you plan to execute a balance transfer to the new card). We add this cost savings to the Total Financial Value.
  • Purchases Interest Savings: How much less in interest you would pay with the new card -- given your expected monthly spending and how much balance you plan to pay off each month -- vs if you were to make those some purchases on your existing card. We add this cost savings to the Total Financial Value.

The resultant Total Financial Value is a number that represents the overall financial value of a credit card to you. While the way the value will be materialized will be in different forms (e.g. cash back, perks, reward points, interest savings, etc.) the Total Financial Value is a single number that describes by how much your net worth would increase solely from using the card (and its benefits) over the expected time period you plan to use it. It also is useful for quickly comparing cards against eachother.

How do we score the Total Financial Value for each card?

We assign a score to each card's Total Financial Value (personalized to you, as calculated above) according to the following:

  • 5.0 Stars: The highest Total Financial Value across all cards.
  • 4.0 to 4.9 Stars: If the card has a Total Financial Value that is in the top quartile (top 25%) of all cards that have a Total Financial Value greater than zero. Scores are scaled according to each card's Total Financial Value within the top quartile.
  • 3.0 to 3.9 Stars: If the card has a Total Financial Value that is in the middle 50% of all cards that have a Total Financial Value greater than zero. Scores are scaled according to each card's Total Financial Value within the middle 50%.
  • 2.0 to 2.9 Stars: If the card has a Total Financial Value that is in the bottom quartile (bottom 25%) of all cards that have a Total Financial Value greater than zero. Scores are scaled according to each card's Total Financial Value within the bottom quartile.
  • 1.0 Stars: If the card has a Total Financial Value that is zero or less.