Experts say the best advice they can give retirees with credit card debt it to pay it all off and quickly, because carrying credit card debt through retirement will limit long-term savings.
Rather than put money into a retirement account, it's best to pay to the debts than attempt to save money elsewhere, Stephen Brobeck, president of the Consumer Federation of America, told Bankrate.com
. "The best investment you can make is to pay off credit card debt first," Brobeck said.
"Paying off debt is not a free pass to put your retirement on permanent hold. Instead, you need to embrace strategies that can help you achieve the dual goal of digging out from under the bills so you can then catch up on retirement and move ahead in the future," Leslie Haggin Geary, of Bankrate.com, writes.
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Should seniors use retirement savings to pay off credit cards?
Typically, it's a bad idea to raid a 401(k) or other investment plan because of the penalties and taxes associated with early withdrawal, advised personal finance expert Lynnette Khalfani-Cox, writing for AARP
. But one way it can be done is if you are still working, you can loan yourself money to pay off the debt, the repay it back to your retirement fund, thus avoiding the tax issues.
"With a 401(k) or 403(b) loan, you pay yourself back the money you borrowed plus you repay yourself interest too. Best of all, the loan immediately gives you the economic benefit of quickly reducing that high interest rate credit card debt that's draining you financially," wrote Khalfani-Cox.
Personal loans from a credit union or even a balance transfer to a low-interest credit card are also more viable strategies, experts said.
Only use retirement funds on high-interest debt, certified financial planner Bruce Cacho-Negrete, told CNN
"The only kind of debt you should even consider raiding your nest egg to pay down is extremely costly debt, such as high-interest credit card bills or a payday loan, Cacho-Negrete said.
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