I have some credit card debt that I would like to pay off. I feel like I am throwing money away on the interest charges each month. I was curious to know if taking a loan from my 401k to pay off my credit cards is a wise thing to do?
Keep in mind this is all very new to me—from what I understand, if I borrow from my retirement account, then I am required to pay back the money I borrow + interest. So say I borrow 1,000 + 5% interest I would have to pay back $1050.
However since I am technically paying back myself, wouldn't it all be going back in to my pocket anyways? Meaning it would be better to take the $1000 from my 401k, pay off my debt (therefore, eliminate the credit card interest each month) and use that money I would be putting towards my credit card interest each month to pay myself back?
Is this a wise thing to do or am I missing something here?