Comments on: What Are Your Thoughts On 401(k) Debit Cards?

By: Eric J. Nisall

Eric J. Nisall — Wed, 23 Jul 2008 00:51:58 +0000

I’ve never been a proponent of putting all of your eggs into one basket, like maxing out your 401(k) just to get the immediate tax break. If you do that at the expense of living today, I think that is a ridiculous strategy, and promotes more problems than it solves. If you find that you aren’t leaving yourself enough post-contribution funds, and you have to raid a 401(k), in turn finding this idea beneficial, I only have one piece of advice: you need to re-prioritize. The whole point of retirement savings is to set aside enough for later so that you are not restricting yourself for today and leaving those funds untouched to compound year-over-year until required in retirement. Otherwise, what is the point at all?

By: No Debt Plan

No Debt Plan — Tue, 22 Jul 2008 23:54:56 +0000

Stupid.

Can’t believe it’s even allowed…

By: "Mo" Money

"Mo" Money — Tue, 22 Jul 2008 23:00:54 +0000

This is a very bad idea. Your 401k is not a “piggy bank” and should not be treated like one. Whoever came up wwith this “brilliant” idea will make good money you can bet on that. But for the average American they need to keep as much in their retirement account as they can.

By: Foobarista

Foobarista — Tue, 22 Jul 2008 21:28:39 +0000

Sounds like another lovely “financial product” that will make someone rich and screw up a lot of people who, unfortunately, don’t know better.

By: Patrick

Patrick — Tue, 22 Jul 2008 20:55:26 +0000

I think it was created on behalf of unscrupulous members of the financial community who want to make money on extra fees and charges. Awful idea.

By: Eden

Eden — Tue, 22 Jul 2008 19:36:39 +0000

Sounds like another way for the average American to spend money they shouldn’t and buy crap they don’t need.

By: Joe @ Simple Debt-Free Finance

Joe @ Simple Debt-Free Finance — Tue, 22 Jul 2008 19:09:58 +0000

A 401(k) is not a savings account – it is your retirement savings. I can’t imagine anyone with a modicum of financial literacy thinking this is a good idea. 401(k) loans are paying for something today with your retirement income people! Yikes!

By: Andy

Andy — Tue, 22 Jul 2008 19:01:44 +0000

Wow, I just did a post on this and my thoughts are as follows :

There more holes in this 401K debit card argument than in Swiss cheese? Firstly borrowing from your 401K is like borrowing against your financial future. It is something you need to carefully think about because of the ramifications like losing the benefit of compounding, tax consequences, transaction fees and loss of any employer match from not contributing. What’s even worse is that if you default and can’t pay back borrowed funds you get hit with high penalties and your credit records get shot. For now, Debit cards mean that folks must have money in the account to withdraw funds. Though, how long before credit cards are introduced with the limit determined based on what’s in your retirement account. In a society where saving and credit is already such a problem, is this something we want to expose our “lower-income and younger people” to?

By: partgypsy

partgypsy — Tue, 22 Jul 2008 18:39:54 +0000

Can I have a credit card for future earnings for social security? I know it’s supposed to be for when I can’t work anymore, but what if I need the money now?

No seriously, one of the stupidest ideas I have heard in a long time. Your 401K is not an ATM. If you need to tap your 401, this means you should cut down your 401 contributions and build up your emergency savings to a higher level.

By: Roy in Virginia

Roy in Virginia — Tue, 22 Jul 2008 18:21:53 +0000

Ah ha! This is just what this country really needs: another way to reduce the retirement funds and portfolios of a populace that already saves too little.

It isn’t bad enough that “the smartest guys in the room” have greased their own portfolios with obscene salaries, they are cashing in while watching the little guys portfolio go into an eroding death spiral. With a debit card in the hands of the beleaguered little guy the suits continue to rake it in while the debit card user loses his tax deferred benefit. Oh, I am certain that the suits will figure out a way to charge interest!!