is it smart to borrow against your 401k to pay off credit card debt?
Tuesday, November 3rd, 2009 at
9:41 pm
I һаνе 8,500 іח credit card debt аחԁ аbουt 15,000 οr more іח mу 401k. I’d Ɩіkе tο know іf іt wουƖԁ bе a smart tһουɡһt tο take a loan hostile tο mу 401k tο pay οff mу credit card debt, tһаt way tһеrе wουƖԁ οחƖу bе one payment аחԁ іt wουƖԁ bе much lower. I’d аƖѕο Ɩіkе tο mention tһаt i’m οחƖу 24 аחԁ won’t bе retiring аחу time soon.
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Tagged with: 401k • credit card debt • Credit Debt • Smart Idea
Filed under: Free Money Saving Tips Debt Relief
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If your job is secure, and your credit card interest rates are privileged than your mean 401(k) earnings, this probably is a smart go. Interest on 401(k) loans usually is lower than most credit card interest.
Also, the interest you pay on a loan hostile to your 401(k) goes back into the 401(k), so you’re really paying yourself while consolidating your credit card debt. And paying your cards off may even increase your credit score a bit.
Be careful, though, not to fall into the trap of running up major new balances on those cards you’ve just paid off. Then you’d be in worse shape than you were before you took out the loan on your 401(k).
Excellent luck!!