Key Takeaways
- For most people, the answer is no—raiding a 401(k) to pay off credit card debt costs far more than grinding through payments.
- The money withdrawn stops earning money for you, and what looks like a modest sum today could grow to almost $200,000 by retirement.
A recent post on Reddit’s r/personalfinance laid out a dilemma many Americans face:
I have about $16k of crushing credit card debt I can barely keep paid ($600) a month…. I have a 25k 401(k) account that needs a new home since I just started a new company. Is it just a terrible idea to pay off my card debt and take half of my monthly card payments ($300) to help build the 401(k) up in the new company.
The poster, who says he’s 38 with two kids, concludes,…