401(k) loan vs. debt relief: Which is better for getting rid of credit card debt now?

MoneyWatch: Managing Your Money 401(k) loan vs. debt relief: Which is better for getting rid of credit card debt now? We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Angelica Leicht Angelica Leicht Senior Editor, Managing Your Money Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications. Read Full Bio Angelica Leicht May 6, 2026 / 12:28 PM EDT / CBS News Add CBS News on Google A 401(k) loan and debt relief solve the same problem through very different means, and at very different costs. Getty Images/iStockphoto Credit card interest rates haven't budged much recently, and that's hardly an oversight on the part of credit card issuers. When the Federal Reserve started hiking its benchmark rate in early 2022 to combat inflation, credit card rates went up in tandem, and at one point even hit a new record-high. But as the rate environment has eased, particularly over the last year, some borrowing rates have declined, but card rates have remained stuck at above 21% on average instead. That has left credit card balances accruing interest at very high rates, and the minimum payments are now barely making a dent for most credit card users.That dynamic is forcing more people to reconsider their repayment strategies — and quickly. In turn, borrowers' retirement accounts have become an increasingly tempting source to draw from for relief. For those with a 401(k), the ability to borrow from their own retirement savings, pay off their credit card debt and then pay themselves back, generally at lower interest rates than their credit cards, can look like a straightforward so...