The pros and cons of borrowing from your 401k [Video]

(InvestigateTV) — Vanguard reported that 13% of 401(k) holders had an outstanding loan at the end of 2023.

People borrow from their 401(k) for various reasons, such as paying off consumer debt, funding home renovations, and more.

Sara Rathner, a personal finance expert with NerdWallet, said borrowing from a 401(k) is an option, but consumers need to be very careful. 

“Just remember that you are robbing your future self when you do this,” she said. “And if the debt currently is such a large problem and you don’t have any other options, it could be something that helps you get out of that debt. But you’re also going to want to also explore how you got into the debt in the first place to prevent having to borrow from your 401(k) again in the future.”

Experian said people also need to consider what happens when they take out a 401(k) loan and then …