Scone: Schumer, Kohl say down with debit cards

Here’s something to chew on with your morning coffee:

It’s not often you can cheer the actions of Congress, so I’ll leap at the opportunity that fell in my lap this morning: Reuters reports that two senators have introduced legislation that would ban 401(k) debit cards. Covered in the Dec. ‘07 EBN, these cards essentially allow 401(k) participants to use their retirement accounts to buy shoes, their morning bagel, get their oil changed, whatever. (Our coverage also reveals that 401(k) loans and withdrawals are rising) Although some of the experts we spoke to at the time weren’t fazed, EBN staff and other sources for the story were appropriately aghast.

Every time my 401(k) statement arrives each quarter and I see my account balance, I immediately think of how nice it would be to use that money to get a new car, new curtains for my living room, remodel our den. If I had a card that allowed me to do all of those things – holy moly! We’re talking online shopping of the likes you’ve probably never seen before. I’m just being honest. The fact that my 401(k) funds are sufficiently far enough out of reach is what keeps my nest egg growing.

And I’m someone who’s more than fully aware of and well versed in the negative consequences those actions would wreak on my retirement security. Imagine the potential havoc for less informed plan members. So I applaud Sens. Charles Schumer (D-N.Y.) and Herb Kohl (D-Wis.) for their efforts to force “companies to abandon this reckless practice. This time, we want to push this bill all the way to becoming law."