401k Debit Cards?

There was a piece this morning on NPR about 401k debit cards. The concept is that you sign up for the program, pay a yearly fee, and set aside some of your 401k money into a 'debit account', which is still part of your 401k. You can withdraw money from that part of the account using the debit card. You are charged for the loan of the amount you actually withdraw, not the amount you put into the account.

As with many concepts, there are potential benefits. The main one I can see is that instead of taking out a loan for the maximum amount you might need, you can set aside that amount in the account, and take a loan against exactly the amount you need. That will decrease the amount you need to pay back, and the associated taxes and fees.

The company offering the debit card also says that people prefer the convenience of debit cards and that people who are hesitant to 'lock' money into a 401k may do it, knowing they have an easier way to get the money out.

I recognize that there are valid situations in which the best option may be for someone to take a loan from their 401k. And I want those people to have that option. But I don't think that it should be easy to do. The easier it is, the more people will do it.

Consider the 'free money' reasoning used by people who get into credit card debt. If people start factoring 401k (or some subset of it) into their 'available money', then they are more likely to spend that money (or at least, more money). I don't mean to say that people aren't responsible enough to manage their own financial well-being, but I don't see any reason to make potentially irresponsible decisions the easy option.

Okay, rant over :)