Pay down higher % card w/ some IRA funds?

[Anonymous]

I heard somewhere that if one's IRA investments aren't increasing percentage-wise more than one's highest % rate credit card, that person should think about an IRA withdrawal (my age=no penalty) to pay CC off, or down.

I doubt anyone's investments are providing big returns (if any) these days, but I remain unemployed and hate seeing several old CC balances (most still below 10% interest) presented each month!! 

?  What's the latest figure re:  # of months of living expense$ one should have in reserve?

[Anonymous]

Wow, well, talk about something that usually generates heated discussions. Cashing in an IRA, or part of it, if the money is in mutal funds incurs a "hidden loss" if say you bought mutual funds at $18 a share that are now worth $6 a share. However, if you're generally pessimistic about the economy for the next several years, like I am, I say IRA schmIRA. Better to be outta CC debt.

[Anonymous]

Thanks for your input, Noah!  I'm surprised this question hasn't encouraged more responses -- others must have a similar dilemma.   I'm in line with your pessimism, but also fear further depletion of "retirement" funds (as I am very near).  However, maybe better that I do some depleting to ease burden of CC debt, esp. for higher-APR balances.  Seems that APR %'s are freezing or increasing, while the opposite is true for most investments!

I believe one cannot even "opt out" (at earlier better terms) without having to pay off entire balance and let them close the account -- BAD for FICO score!!

? Anyone know what happens w/ CC companies/policies with increased government "investment" in some (e.g. Citibank)

[Anonymous]

my husband lost his job and part of our contingency plan that unfortunately came true when he was unable to find a job. anyway, we took a $50K draw on his $250 IRA to live on (we just can't make the mortgage on my income). There's still two retirement accounts that we're not touching unless God-forbid it's absolutely necessary.

Anyway, despite the penalties,we had no choice. But right after we took the hit, my salary went up. So despite being a little nervous about doing it, we took $25K and paid off every bit of our CC debt, student loans, etc. Now, our credit scores are 735 and 750 respectively. 

If he still doesn't find a job, of course, we might unfortunately need to take our next 'draw' from the IRA sooner than we had hoped, but we're happy that at least we have that good credit score AND available lines of credit on those still-open-but-zero-balance credit cards.

While I'm confident that this is the best decision for us....I'm interested to hear others' thoughts.

[Anonymous]

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@Anonymous wrote:

I believe one cannot even "opt out" (at earlier better terms) without having to pay off entire balance and let them close the account -- BAD for FICO score!!

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Don't fret too much about the "closed by credit card company" entry on a CR. It would not affect your FICO score (you know that secret number Experian won't tell you) and the only time anyone would bother is during a manual review. They'd ask, and you could honestly say, "I was a good customer, paying on time, and they jacked up my credit card rate for no reason other than they made bad loans and had to get bought up the federal government."

OK, you could leave off the part in bold italics if you like.

[Junejer]

It's my opinion that if your "savings" accounts are yielding a lower interest rate than you are paying out in debt, then you don't have a savings. I am currently doing what I have to do in order to eliminate my debt, mortgage included, as soon as possible.

[Anonymous]

My understanding is that "available" credit -v- "in-use" credit ratio is worse (lowering FICO credit score) if a 0-balance CC account is closed rather than kept open w/ no balance, i.e. that available (unused) credit in an open account helps offset credit in use on other cards.