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Consumers stung by the sudden doubling of their minimum required monthly credit card payments are seeking ways to eliminate credit card debt by replacing their card debt with cheaper alternatives such as 401(k) loans.

Washington DC (PRWEB) January 10, 2006 -- Consumers stung by the sudden doubling of their minimum required monthly credit card payments are finding new ways to eliminate credit card debt by replacing their card debt with cheaper alternatives such as a 401(k) loan, said retirement plan expert, Daniel Lamaute, CEO of Lamaute Capital, Inc. (InvestSafe.com).

Large numbers of consumers will be unable to pay the hundreds of dollars more per month on their credit card bills and may fall deeper in debt trouble. That’s because, with a payment received just one day late, some credit card companies will immediately hike their interest rate to as high as 29 percent and demand a late payment fee.

“We are already seeing more inquiries about the 401(k) loan as consumers look for ways to eliminate their high credit card debt”, says Lamaute. Key attractions of the 401(k) loan are:

•    There's little paperwork, and there's no credit check.
•    The interest paid on a 401(k) loan is credited to the 401(k) account - so borrowers pay interest to themselves, not to a bank or other lender.
•    There are no taxes and penalties on early withdrawal as long as the loan is repaid on time according to the loan terms.
•    The Interest rate on many 401(k) loans is set at prime rate and is fixed for 5 years, the normal term of a 401(k) loan.

One should contact his employer to learn if their 401(k) plan allows loans. Independent contractor and individuals with their own business (part-time or full-time) can open their own Solo 401k plan with a loan feature.

It’s possible to transfer funds from IRAs, 401k from a previous employer, SEP plan or other qualified retirement funds to a Solo 401(k) plan and borrow up to a maximum of $50,000 or 50% of the Solo 401(k) account balance, whichever is less.

Make sure, however, to follow the 401(k) loan guidelines. Defaulting on a 401(k) loan is very costly indeed, and will cause the outstanding 401(k) loan balance to be treated as a withdrawal subject to tax plus a possible 10 percent tax penalty.

Lamaute Capital, Inc., (www.InvestSafe.com) is an investment firm that specializes in setting up retirement plans.



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Yes, low APR credit cards are on the rise. Many credit cards are competing for your business to give you the best and lowest rates available today. There are so many credit cards from you to choose from that they are doing all kinds of things to get your attention including lowering their interest rate and giving you no annual fees.

Why is this happening? Because there are so many credit card companies. They all want your business and this is an attractive incentive to get you to apply and own one of their credit cards. If you choose a low APR credit card over one with 19.99 percent you are sure to go with the lower APR.

The only problem is that sometime these 0% and low APR credit cards are only promotional ways to get you to apply and then later your interest rate will rise. Many credit card companies have low APR credit cards for a certain amount of time such as 3 months, 6 months and some up to one year. You will have to compare to find out which one keeps the lower APR after the promotional period to ensure you are getting the best deal around.

No matter what the reason low APR credit cards are here to stay as long as the companies are competing for your business. Just remember to compare everything they offer besides the lower interest rate. You may find that several credit card companies are now offering other wonderful incentives for you to apply with them such as reward programs.

No matter which company you choose, you will enjoy the low APR credit cards even if it is only for a limited time. You will be able to save money on your purchases because you will not have to pay any interest until the promotional period is over. Just be sure your balance is very low when the interest rate kicks in and you will be fine.