Should I borrow from my 401k to pay credit card bills?

In a tough financial position. Have nearly 13,000 in credit card debt. Some of the percentages--29% interest, 28%. I can borrow from 401k and rapay at lower interest, or is it better to take from my savings, and have no cushion or emergency fund. HELP

Borrowing from your 401k is like stealing from your retirement.

Bare that in mind.

Yes, you will be paying that money back at lower interest than your current credit card debt, but you will lose precious time that your 401k would be earning interest on that money, and that can never be made up.

Here's another reason why it's a bad idea: Contrary to what we hear in the news on a daily basis, credit card companies do not want to charge you into oblivion with high interest rates. You can't get blood from a stone, and banks know that there is a point at which you can never pay them back and may even declare bankruptcy, which means they never see the money you owed them.

You can make it a win-win for you and the credit card company, but it will take some effort on your end.

First, call them up and plead your case that you simply cannot keep up with the minimum payments ESPECIALLY while you are accruing so much in interest finance charges. Be honest with them and tell them that you want to make good on your debt, but they need to work with you too. You should be able to get them to lower your rate to at least 15%, but try for under 10% or 0% for a limited time, ex: Can you knock the rate down to 8% for 12 months so I can get a jump on this? Or maybe stop the interest clock for 6 months? Alternatively, you may be able to get them to forgive a portion of the total amount.

The important thing then is to STOP USING the credit card and PAY DOWN your balance. Otherwise, you'll only be POSTPONING THE PAIN.

I've been through this myself, though it was only a little over 7k in credit card, but I was able to pay off that plus 2 car loans ahead of schedule once I got fed up with all the interest payments and became determined to turn my life around. If you're interested, you can read about it here:

http://onlinemoneyfinance.blogspot.com/2007/12/7-steps-to-getting-out-of-debt.html

I talk about some of the bigger-picture things I did to change my life style and conquer my debt. $13,000 is a lot, but it's not insurmountable and you can do it without stealing from your future- hang in there!

George.
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http://onlinemoneyfinance.blogspot.com

First, it would depend on how much you make..I would avoid it at all costs..You are going to get raped in taxes! 13000 is not much...Is there a second job you can get to pay it down? What kind of car are you driving?? Can you sell it and just get a beater car for a while? Do you have anything you can sell?? I would explore all options before you do this..
Also, check out dave ramsey....

Use you bank account it is the lowest interest rate. If you need some cash in the future borrow against your 401k. But try not to do this tighten your belt and cheap out till you can reload the saving account.

Hello, well its really a matter of what your savings are and can they afford the 13k -
29 -28 % which you are indicatiing are very high intrestes so i think its your choice to sort it out as soon as possible-

See www.401k.org for details on premature withdrawals from 401(k) accounts.

Don't take it out of 401K, that's your future retirement. Use the savings. You don't really need the "cushion" since in a worst case scenario you could always use your credit cards for cash (once they are paid off). Get rid of that debt however you can. You cannot move forward with interest rates that high on that much money. It will always drag you down.

no first look at other options

a helpfull website listed below

no it is a good Idea to borrow from your 401k just don't rack up more debt feeling that it is being taken care of....

Honestly? YES. Any time you can borrow money and pay off a debt with a high interest rate with money borrowed at a LOWER interest rate (which is PAID TO YOURSELF in the case of a 401(k)), you should jump at the chance. You will owe less money in the long-term, and it all goes back to you!

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