My early career 401(k) receives Roth contributions to 11% of my income with a 4% employer match (so 15% net contribution) and returns 13%.

My credit card balance is currently higher than my 401(k) balance and charges 17% APR.

Is it prudent to lower the contribution to, say 4% (8% net with employer match), in order to pay down the CC faster?

Neither balance exceeds $8,000 USD.

  • Strictly from an asset protection POV, I would say "heck no", since a 401K is protected money entirely shielded from bankruptcy (being a trust in your name), whereas credit card debt can be easily shaken off if you hit hard times - either declare bankruptcy, or just don't pay it and weather the collectionstorm. In the USA you never know when bankruptcy can strike, medical being the #1 cause. Commented Jul 7, 2017 at 16:29
  • Are you still using the credit card? Do you have to save 11% to get the 4% match or is it 1 to 1 up to 4%?
    – D Stanley
    Commented Jul 7, 2017 at 16:32
  • 1:1 up to 4%, and yes I use the CC regularly for small purchases, but some larger home purchases are what created the balance in the first place. To be certain, both balances do not exceed $8,000 USD (401(k) and CC balances).
    – CKM
    Commented Jul 7, 2017 at 16:33
  • 1
    @CMosychuk, stop spending on the card. As long as you have a carried balance you are paying interest on all of those small purchases as they occur, that drastically changes the price of your coffee........
    – quid
    Commented Jul 7, 2017 at 18:00

3 Answers 3


First of all, you need to stop using the card completely. Yes, that means you lose out on cash back, double miles, whatever, but that's how you got to this mess in the first place. Switch to a cash budget until you can consistently spend less than you bring home. Keep better track of your expenses, build an emergency fund, and learn to save for expenses rather than borrow for them until you have your spending under control. If you can't cut your expenses any more, consider ways to increase your income (more hours at work, part-time jobs, sell stuff, etc.)

Assuming that the employer match is 1-to-1 up to 4%, and you're saving an additional 7 percent to get to 15% total, I would definitely lower your contribution down to 4%, get the card paid off, and ONLY bump your contribution back up once you can safely pay off the card each month and know how much you can contribute.

It is not wise to put 15% in retirement if that causes you to spend more than your net take-home pay. Your "13%" in your Roth is not guaranteed by any means, but the interest you pay on your credit card is.

I would even be tempted to cut your retirement completely until the debt is paid, but more for motivational reasons that mathematical:

  • You are motivated to pay off the card faster because you know that you are missing out on a match until you do.
  • You will not see the benefit of the match until retirement (and have plenty of time to make it up) but you feel the pain of the debt now.

I would be more concerned about living within your income at this point than getting a company match. I believe the benefits of spending wisely will outweigh a temporary loss in matched retirement funds in the long run.


With a credit card debt at 17%, you should basically not eat in order to pay the balance off. This should be gone within the month.

That being said, I would have a hard time reducing my contributions below the 4%, but would certainly do it to the 4%. However, I would also deliver pizzas on nights and weekends and work all available overtime. Coincidentally the pizza place by my home is hiring delivery drivers however, they did not disclose how much they typically make. Only that they make min wage plus tips.

Make sure you stop borrowing first, then try to have this knocked out in 4 weeks or less.

  • 1
    How can this be knocked out in 4 weeks or less?
    – TTT
    Commented Jul 7, 2017 at 23:15

Depending on your credit score you might be able to balance transfer to a lower rate. Credit is still cheap, with a good credit score you should be able to get ~ 6%, maybe even lower if you go through a credit union.

Given you return is 13% (!!) I would not divert money from that.

  • 2
    You would keep money flowing in to something that might make 13% over sending it to a liability definitely costing 17%?
    – quid
    Commented Jul 7, 2017 at 17:57
  • @quid Over a liability costing ~ 6%, yes.
    – ventsyv
    Commented Jul 7, 2017 at 19:30
  • 3
    It doesn't cost 6%, it costs 17%. IF this person gets another card AND does a balance transfer, THEN the terms would be different.
    – quid
    Commented Jul 7, 2017 at 19:35
  • @quid So refinance. I bet you getting a ROI of 13% will be much more difficult than getting a 6% balance transfer.
    – ventsyv
    Commented Jul 9, 2017 at 23:41
  • The ROI is not guaranteed. Its a risky return versus a guaranteed loss. And 13% is well above average so it stands to reason it will be short lived.
    – quid
    Commented Jul 9, 2017 at 23:59

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