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Rather than dive into retirement funds, consumer credit counseling may present options for dealing with credit card debt
By Peggy Stillwell on Feb 9th, 2010
When facing problems with trying to pay off debt in the short term, some people may consider tapping into funds intended for the future.
However, financial expert Liz Pulliam Weston noted recently that dipping into retirement funds is one of least intelligent things a person can do in order to deal with credit card debt.
"You'll pay penalties and taxes that typically equal one-quarter to one-half of any withdrawal, plus you lose the future tax-deferred returns that money could make," Pulliam Weston wrote in an entry on her website.
Pulliam Weston's opinion came in response to a reader who has $50,000 in credit card debt and $250,000 in retirement funds. The reader was contemplating taking some of the retirement funds out and using it to pay off debt.
One thing that could threaten someone with that much debt is bankruptcy. As a result, Pulliam Weston recommended a consultation with a bankruptcy attorney along with a credit counseling service.
Along with helping establish a budget, a consumer credit counseling service may be able to help consumers pay off debt through programs like debt consolidation, which may help people lower their interest payments.
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