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For most of the last decade, IRS statutory rate for underpayment/overpayment of tax was 3%, an historically low number. It briefly spiked up to 6% in 2019, the

For most of the last decade, IRS statutory rate for underpayment/overpayment of tax was 3%, an historically low number. It briefly spiked up to 6% in 2019, then fell back to 3% for a while, but last quarter went back up to 4%, with more increases expected.[0] This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. [0]https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp/table-of-underpayment-rates https://www.dol.gov/agencies/ebsa/employers-and-advisers/pla...

gruez 5y ago
>This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. Yeah but you're severely limited in how much money you can "save" in this account. Similarly, it's like arguing that rates are super high because you can get I-bonds at 7.12%, but neglecting to mention the most you can buy per year is 10k.
- PopAlongKid 5y ago
  I wasn't really suggesting it as a savings vehicle, rather I was contrasting how a neutral government rate is going up significantly while banks are still stubbornly sticking to their artificially low savings rates.
- toomuchtodo 5y ago
  The fixed rate of those bonds is zero [1], that’s important to remember. The inflation adjustment they pay means your cash invested won’t lose value, not that you’re generating real return. [1] https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#rate https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
SnowHill9902 5y ago
It’s not a zero-risk rate, it’s just a “reasonable rate which is painful enough to make you prefer paying than not paying while at the same time not seeming too high as to be abusive”. Why are late fees $350, $450 or whatever? It’s not a real cost of anything. It’s just a reasonable fee.

gruez 5y ago

>This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. Yeah but you're severely limited in how much money you can "save" in this account. Similarly, it's like arguing that rates are super high because you can get I-bonds at 7.12%, but neglecting to mention the most you can buy per year is 10k.

PopAlongKid 5y ago
I wasn't really suggesting it as a savings vehicle, rather I was contrasting how a neutral government rate is going up significantly while banks are still stubbornly sticking to their artificially low savings rates.
toomuchtodo 5y ago
The fixed rate of those bonds is zero [1], that’s important to remember. The inflation adjustment they pay means your cash invested won’t lose value, not that you’re generating real return. [1] https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#rate https://www.treasurydirect.gov/indiv/research/indepth/ibonds...

SnowHill9902 5y ago

It’s not a zero-risk rate, it’s just a “reasonable rate which is painful enough to make you prefer paying than not paying while at the same time not seeming too high as to be abusive”. Why are late fees $350, $450 or whatever? It’s not a real cost of anything. It’s just a reasonable fee.