A 401(k) debit card is deceivingly like the debit cards you're familiar with, except the money is drawn from your retirement savings and must be paid back to yourself with interest — essentially, it is a loan against your 401(k). You're responsible for making punctual payments, and if you miss one, you risk having to pay early withdrawal penalties.
While you'd be paying interest now, you'd really be borrowing from your future self. When you remove funds from your retirement savings it reduces the potential for compounding interest, therefore hurting your overall long-term savings goal and strategy. Do yourself a favor and pretend that 401(k) debit cards don't exist; you'll be grateful when you need to rely on those funds for living.
Ben Sherman
Opening Ceremony
Hanky Panky
This seems to be a particularly wicked idea that never should have seen the light of day.
1i agree with you - there's something wrong about it. the whole point of your 401(k) is that you're saving money for the future, yet if you're able to easily access it now and spend it - then it loses the point. i hope that the idea gets squashed soon and that people don't abuse it. not enough people are able to save money for IRAs and the sort already. when you have $$ taken from your paycheck before you even realize it - at least there's SOME chance that you're saving!
2okay, this really seems like the worst idea EVER!
3Wow, I never heard of this ---thanks Savvy for letting us know. This sounds so dangerous.
4This is such a bad idea - I had never heard of this! Thanks for posting it, Savvy!
5This is the dumbest thing I have ever heard of.
6I got to hear what Suze Orman has to say about this.
One more thing. If you are smart enough to save for your future, and have the funds to do so; why they choose to do something that clearly is counter-product to the first objective..
7Anyone who decides on trying this, more than likely has a lot of finical problems.
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