How do I handle this credit card debt … should I use my 401k

Hey everyone,

I’m 28 and I’ve got two credit cards with balances I’m struggling to manage. One has $10.5k (Chase Sapphire) and the other $4k (Amazon card). I usually pay $2200 monthly across both cards. On top of that, I pay $2200 for rent and $267 for my car loan. I make just under $105k a year.

The interest is killing me—$250/month on the first card and $50 on the second. My spending habits have been bad over the years, and it’s led me here. I’m trying to figure out the best way to tackle this debt.

Should I take a loan from my 401k? They say I can borrow about $12k. Would that be smarter than chipping away at these balances and letting the interest pile up?

Two main questions:

  1. Will my monthly interest increase if I don’t pay off the balances faster?
  2. Should I use my 401k to pay off these cards since the interest might be lower than what I’m paying now?

I’d really appreciate any advice. Thanks in advance!

Stick with your Amazon card for essentials like gas and cut back on spending everywhere else. Pay the minimum on Amazon (or slightly more) and put the rest of your payment—around $2k—on the Chase card each month. Don’t use the Chase card at all. This will help get the bigger interest under control.

Cutting back doesn’t mean punishing yourself; just focus on the basics. When the Amazon card’s minimum gets higher, pay it down in one go, then switch to focusing on the Chase card again.

Don’t touch your 401k—it’s your safety net, especially while renting. If your employer matches contributions, don’t stop contributing either, but don’t add extra for now.

It’ll take about a year of discipline, but you can do it. Once you’re free of this debt, aim to save for something bigger like a house.

@Chen
Thanks for the advice! Would it make sense to open a third card for basic needs while I focus on paying off the other two? I don’t want to keep increasing the balances.

Val said:
@Chen
Thanks for the advice! Would it make sense to open a third card for basic needs while I focus on paying off the other two? I don’t want to keep increasing the balances.

If you’re not planning any big expenses soon, you might look into a balance transfer card. These often come with a year of no interest, which could help simplify things while you pay down your debt.

@Chen
How does a balance transfer card work? It sounds too good to be true—just no interest for a year?

Val said:
@Chen
How does a balance transfer card work? It sounds too good to be true—just no interest for a year?

It’s legit. The card gives you money to pay off your other cards, and you won’t pay interest on that amount for the first year. After that, regular interest kicks in. Just be careful not to use the card for other purchases unless you pay it off in full monthly.

@Chen
I have a credit score of about 730. Would opening a balance transfer card hurt my score?

Val said:
@Chen
I have a credit score of about 730. Would opening a balance transfer card hurt my score?

Your score should be fine. These cards usually come with higher limits, so having more available credit might even help your score. Just focus on paying it off within the zero-interest period.

Val said:
@Chen
How does a balance transfer card work? It sounds too good to be true—just no interest for a year?

Here’s a link to get you started: Balance Transfer Credit Cards.

@Chen
Thanks so much for all your help and for answering all my questions!

Val said:
@Chen
Thanks so much for all your help and for answering all my questions!

You’re welcome! Just be smart about it. Once you’re out of this debt, focus on paying off your car and saving for a house.

Val said:
@Chen
Thanks so much for all your help and for answering all my questions!

When you’re debt-free, life gets so much better. It’s worth the hard work now for peace of mind later.

Think of interest as the cost of borrowing money—it adds up fast. Look at where your money is really going each month. On your salary, you should be able to tackle this without touching your 401k unless there’s a major issue like medical expenses. Make a budget and stick to it. Always pay more than the minimum to make real progress.