401k debit cards?
January 15, 2008
Wow - I was just blown away reading this story @ Yahoo this morning. Debit cards you can use against your 401k. Borrowing against your 401k has traditionally been a ‘last resort’, because if you didn’t repay it within 60 days of leaving a company, you had to count it as regular income, pay tax, plus a penalty. This new scheme described gives you up to 5 years to pay the loan back, regardless of where you work, which is a good thing. But they’re also charging you for the privilege of borrowing your own money - 2.9% above prime, I believe.
I dunno - in general I think this is a bad idea. People will get themselves in trouble with this scheme, and *I* - and you - and many other people - will end up bailing them out in the next 20-40 years. Not something I’m looking forward to.
What do you think?
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