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Put Your Wallet to Work

I'm an Avoider.

That's according to a money personality test that my Foolish colleague Dayana Yochim wrote about here. I took it because I was curious to see whether my lapse back into debt could be meaningfully explained. Well, now I know: I have money issues.

Don't look at me that way!
The really bad news is that I'm not alone. Take the same quiz I did, and you're likely to find that you're either -- gulp -- an Avoider like me, a Hoarder, or a Splurger. Hoarders tend to relish big bank accounts, but are unwilling to spend money on much more than the basic necessities. Splurgers, on the other hand, just don't know when to stop spending.

So, which are you? It's worth asking. When I did, I found out that my credit cards were working against me.

Check yourself before you wreck yourself
Can picking the right credit card help your finances? Absolutely. Start by answering -- honestly! -- these three questions:

  1. What big purchases are you planning in the next 10 years? Have a child who will be going to college? Maybe it's time you got a card that contributes funds to a 529 college plan. Want to take a big vacation like my wife and I plan to? A rewards card might be exactly what you need.

  2. How will you save the money to fund those purchases? Here's where you get into the specifics. For example, if you estimate that it will cost $40,000 to send junior to college, then determine how much the rewards from a 529 card would add to tuition savings. Is the result better than what you'd receive from a cash-back card if you deposited the earnings into a high-yield savings account or index fund?

  3. What could get in your way? If you're an Avoider, a card that offers flexible spending is probably not a good idea. A charge card that requires you to pay off the balance each month, such as the classic green card from American Express (NYSE: AXP  ) , might your best bet. If, on the other hand, you're a Hoarder who never uses credit except for emergencies, and you pay off your card every month without fail, a cash-back or rewards deal might be better.

Putting your wallet to work
Once you've answered these questions, it's time to assess your wallet. Do you have the right card in your wallet? If not, head over to and look for a better one.

When you arrive at, you'll see a navigation bar on the left, where you can search by type of card or provider. I suggest searching by type of card first, with a focus on the type that fits your money personality.

You'll find a variety of options on this page, including deals for balance transfers, airline rewards for Continental Airlines (NYSE: CAL  ) and US Airways (NYSE: LCC  ) , and even cards for small-business owners. Best of all, each deal includes a link to the fine print for every card, where information on interest rates, payment penalties, and reward restrictions are listed in detail. Be sure to read up before applying for any card.

The Foolish bottom line
I'm not much for kitchen-table psychology, but experience shows that I have money management issues. Avoiding them has proven costly over the years. But I've recently righted my wallet, and you can do the same.

Of course, there's more to personal finance than just getting the right credit card. If you want more Foolish advice on making the most of your moola, may I suggest Motley Fool GreenLight? Our new personal-finance service features the best tips Fools have to offer. Click here to learn more without spending a dime.

Fool contributor Tim Beyers thinks the Fool's Credit Cards discussion board is the best place for recovering debt junkies like himself. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.

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