I have about $10,000 in loans to Stafford at an interest rate of about 7 per cent. I am considering taking out a loan on my thrift plan account to repay some of my credit, as the interest rate I would repay for the TSP loan is much lower than my student loans. I am 26 years old and have about $12,000 in PST, which would allow me to immediately repay $6,000 of my loans and save a lot of interest in the years to come. Good idea, bad idea? The interest rate you pay for the term of the loan is equal to the interest rate paid by the TSP-G fund at the time of your loan. This interest rate was on average 1.77% higher than the three-month treasury bill rate. This means that you pay a very modest premium on short-term cash bonds to borrow medium and long term (five to fifteen years). Since you pay these “interest” to yourself and actually contribute only to your savings, you will in many ways receive an interest-free loan. The easiest way to apply for a loan for the savings plan is electronic, www.tsp.gov. To access the TSP credit request, log in to my account and select “TSP Loans.” Depending on your old age pension (FERS, CSRS or uniformed services), marital status, type of TSP loan and how you want to get the loan payment (by cheque or direct payment), you can either take out the TSP credit application form online or ask you to print out the partially completed TSP loan contract , to fill out the form. and by mail or fax to the TSP (with all the necessary additional information). The TSP must receive the TSP loan agreement before the expiry date at the beginning of the agreement. You can borrow your own contributions and income from your own contributions from the savings plan account from which you want to borrow, without outstanding credit of up to $50,000, less your highest credit balance, if available, in the last 12 months. Although the loan is currently paid in full, it is included in the calculation if it has been opened at any time in the past 12 months.

If you have both a calendar account and a single service account, combined account balances and loan outstandings are used to calculate the maximum amount of the TSP loan. You pay a tax of $50 per loan, deducted from the entire amount borrowed. For example, if you want to borrow $10,000 from your savings plan, you will receive a cheque for $9,950. Although this fee is very small compared to those charged for many other types of credit, note that a $50 over a year, $1000 loans leads to an effective commission of 5%, so it is generally not profitable for small loans.