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Submitted by: Gerri

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Mary, You raise a great question. Many people are using their retirement funds to pay credit card debt. It's so common that we devote and entire chapter to it in Reduce Debt, Reduce Stress. In most cases, we don't recommend going this route because of the cost involved (taxes and penalty - though in your case it's the penalty that is the issue); the fact that retirement funds are protected from creditors; and because for most people it's just a temporary fix that doesn't provide a long-term solution. In your case, you have an excellent interest rate, and a relatively small debt. So having just your basic question in front of me, I'd wouldn't recommend you use your Roth IRA to pay off your credit card debt. It sounds like you should be able to tackled your debt by either redirecting money from your budget to pay it off, or by generating some additional income to do so. But perhaps there is more to the story than your basic question describes. If so, feel free to elaborate with more details and we'll try to help!

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