401(k) debit cards - that's right, a card that allows easy raiding of retirement benefits

[Liberal_in_LA]

http://www.reuters.com/article/politicsNews/idUSN1631506120080716

Lawmakers seek to ban 401(k) debit cards
Wed Jul 16, 2008 2:06pm

WASHINGTON (Reuters) - Debit cards linked to retirement savings accounts would be banned under a bill set to be introduced in the U.S. Senate.

Sen. Charles Schumer, a New York Democrat, and Sen. Herb Kohl, a Democrat from Wisconsin, said on Wednesday that they oppose the 401(k) debit cards, which are being revived by companies seeking to capitalize on tightened access to consumer credit.

"After retreating over the last few years, companies looking to raid Americans' 401(k) accounts are making a comeback," Schumer said in a statement.

[napoleon_in_rags]

1. Ah, another step toward the soilent green retirement plan... nt

[Lasher]

2. Good Lord, that's the last thing we need now.

Throw some gasoline on that fire - if you can afford it.

[melody]

3. That may be the dumbest idea I've seen in four years ...

And that is truly saying something.

[GoesTo11]

4. Use it once your home equity debit card is tapped out!

[MikeE]

5. I'll tell you another scary thing

I see these ads on TV from a lawyer in the DC area, who is promoting converting annuities and structured settlements into "cash now". I mean, especially with annuities, these are people's retirement plan etc. and they give you pennies on the dollar for a lumpsum payment. These are worse than payday loans if you ask me.

[Liberal_in_LA]

8. I've heard those commercials in California

[Xithras]

10. Those "cash now" scams are NEVER a good idea.

In almost all cases, a person could obtain a conventional loan for the cash (JG Wentworth and competitors usually pay about 50% of the settlement/annuity value), use the annuity or settlement monies to pay the loan off over time, and still have cash left in the settlement or annuity when the loan was paid off. In some cases, trading a settlement to JG Wentworth has the same financial impact as taking out a loan at 22+% interest. It's a ripoff.

[alcibiades_mystery]

6. The penalties on early withdraws are correct

For many Americans, the 401(k) is the only way thy save anything at all.

Put that into a trinket cycle and watch the shit really hit the fan.

[RB TexLa]

7. So because the irresponsible can't be trusted the responsible can't have things like this?

[Liberal_in_LA]

9. No but most people ended up over using 'cards' when they have access to them...

I think 401(k) debit cards will become another source of quick cash for the desparate.

[Xithras]

11. What "responsible" person borrows against their 401k?

n/t