Banking industry unveils a 401(k) debit card

Those creative folks in the banking industry have come up with a new one: the 401(k) debit card. Now instead of having to justify a loan against a 401(k) account for something big-a down payment on a first home, say-you're free to swipe for anything from new shoes to a bag of fertilizer. If your 401(k) plan offers this option, you'll still be limited to borrowing $50,000 or 50 percent of your vested account balance, whichever is less. The amount is then transferred to a money market account, which earns tax-deferred dividends until you use the debit card or write a check against the account. Sounds decent enough, but with a more traditional loan from a 401(k) plan, the interest on the loan goes right back into your account, often through payroll deduction. That's not an option with a 401(k) debit card, according to nongovernmental securities regulator FINRA, which has posted an investor alert on its website, http://www.finra.org.