Credit Card Secured by Roth IRA?

Credit Repair, Credit Cards, Credit Lines Other 2 Comments »

Have you every asked, Can you get a credit card secured by Roth IRA? How about this one: Can I withdraw funds from my IRA to pay off credit card debt? Well in this post, I am going to quickly cover these requests, and the open it up for any comments or questions you may have.

  • Credit Card Secured Roth IRA
    • The short answer to this question is no, the government does not allow you, or any family, etc. to borrow against your IRA, or to benefit in any way from your IRA or Roth IRA account, other than the intended use of the account (ie when your retire, using it for retirement). This includes any type of borrowing, whether it be through a credit card, bank, or anything else. Now you can, of course, withdraw money from your IRA accounts at a (typically) 10% tax penalty to pay any debt you wish. In this scenario I would say you should take careful consideration, and use my credit card debt payoff calculator for assistance in calculating a time line for debt freedom, then weigh that option with the tax penalty that you face.
    • However, the government does allow you to roll over retirement accounts, and gives you 60 days to complete the transaction. So, if you need money right away, and you can repay it within 60 days, you could use the money from retirement to meet the immediate need, and make sure to repay it all when you complete the roll over to the account. This is tricky, so I highly recommend seeking professional assistance on this one.
  • Withdrawing Funds from an IRA to Pay Off Credit Card Debt
    • As noted above, this is a viable option. But you must consider what you will be giving up in the long term. In my article, Invest in a Traditional IRA or a Roth IRA?, I compare the difference of the two just based on tax implications, and there is a significant difference in the amount of money accumulated at retirement age. So if you further compound that by withdrawing funds from your IRA to pay off debt, you may be setting yourself up for long term problems. There are other options; one option is to try to pay off debt using debt stacking, another is to seek online credit counseling. Debt stacking can help you accelerate your debt freedom date without contributing any additional monies to your credit cards. I do not recommend withdrawing from your IRA for any reason other than retirement, but if you have exhausted all other options, then consider it with reluctance.

In short, there really isn’t a viable option to borrow, or to secure a credit card with any kind of IRA. Even withdrawing the funds temporarily while rolling over to other fund doesn’t help most people very much. And taking the funds out to pay off debt isn’t a very good option either, because of the long term negative effects. If it all possible, utilize other methods, as mentioned above to get debt free. And lastly, make sure to sign up for my RSS feed, to get the latest and greatest on personal finance and how to reach your financial goals. It’s free, and well worth your time. If you have additional questions or comments, please post them below.

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To apply for a credit card, one needs to now about the way the credit card finances work. Preferably a low interest card should be applied for. This is because whether it is a bank of america card , or any other banks, every bank charges a certain amount for credit cashed. Before venturing into bank loan market on your card, it is advisable to consult a home mortgage consultant, who are used to such requests and their outcomes.


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Save Embarrassment with Online Credit Counseling

Paying Off Debt, Credit Repair No Comments »

If you have been struggling to get rid of harassing creditors, then online credit counseling may be the way to go.  Online credit counseling can be purchased, but there are also free and non-profit organizations available.  You can go to a credit counselor if you like, but going in to see a counselor face to face can be embarrassing, and you may lose some confidentiality over time as people tend to get to know you and talk. Online credit counseling is a convenient and flexible way for you to to get personalized, and more importantly, completely confidential assistance.  It is important to realize the difference between credit counseling and credit repair services, as credit counseling only gives you information and helps you develop a plan on how to repair your credit, whereas credit repair services actually help you do some or all of the work.

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Credit Repair Basic Steps

Credit Repair No Comments »

Credit Repair is generally the process of bringing “back to life” your credit history and raising your credit score. Credit repair is the process of restoring your financial reputation. Credit repair is completely legal as long as you follow the rules and guidelines provided by The “Fair Credit Reporting Act”. The “legal” steps to credit repair include:

  • Obtaining a copy of your credit report.
    You are entitled to a “free” copy of your credit report once a year from annualcreditreport.com, or you can buy a credit report from one of the three major reporting agencies - Equifax.com, TransUnion.com, or Experian.com.
  • Review the list of negative entries.
    Be sure to carefully review the entries, and focus on the negative items that are of longer duration, e.g. 90 day items are more important than 30 day items.
    Read the rest of this entry »


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