Piggy bank to illustrate the interest of the Livret A passbook and its savings

The Livret A interest rate remains fixed at 3% until January 2025, confirming its position as a popular savings product in France. This state-guaranteed, tax-free and liquid savings product enjoys popularity due to its security and tax-exempt status, despite a relatively low interest rate.

With a Livret A ceiling that directly influences the maximum amount of savings benefiting from this advantageous interest, it represents a risk-free, tax-free savings option for savers. This guide will explore expectations for the Livret A interest rate in 2024 and provide advice on how to maximise its benefits in the current savings environment.

How Livret A savings accounts work

The Livret A is a regulated, tax-free savings option available to anyone, minor or adult, including non-residents, with a net interest rate of 3% from 1 February 2023. Here are some key points about how it works:

  • Interest calculation Interest: Interest is calculated on the basis of the inflation rate and the six-month Euribor rate, adjusted twice a year, in February and August. Interest is calculated every two weeks, on the 1st and 16th of the month, and is capitalised annually on 31 December.
  • Deposits and withdrawals The maximum amount that can be deposited is €22,950 for individuals, with a minimum opening deposit of €10. Withdrawals and deposits made on the 1st or 16th of the month do not affect the calculation of interest, offering savers flexibility. However, some banks may limit large withdrawals.
  • Specific rules Livret A accounts: It is forbidden to open several Livret A accounts in the name of the same person, with the exception of those who had both a Livret A and a Livret Bleu before 1 September 1979. Social benefits and pensions can be deposited directly into a Livret A, and if the account is inactive for 10 years, it is automatically transferred to the Caisse des dépôts et consignations.

Interest rates forecast for 2024

For 2024, the Livret A interest rate will remain at 3% until January 2025, despite forecast inflation of 2.5% for the year. This is notable because the rate should have increased to 4% from 1 February 2024, but it remains unchanged. Here's a quick comparison with other savings products for the same period:

  • Livret d'épargne populaire (LEP) passbook savings account 5% interest rate from 1 February to 31 July 2024, offering a return well above inflation.
  • Housing savings plan (PEL) Fixed rate of 2.25% for accounts opened from 1 January 2024, demonstrating a less lucrative option compared with the Livret A and LEP.
  • Life insurance Return to euro funds at 2.5% in 2023, with some contracts offering up to 3.70%.

The difference between a rate of 3% and 4% would represent an additional gain of 27.50 euros over six months for an average Livret A account (5,500 euros). Despite the rate being frozen at 3%, the Livret A and LEP will remain more advantageous than inflation, assuming that inflation falls below 3%.

Comparison with other savings products

When exploring other savings vehicles, it is essential to understand their features and benefits so that you can compare them effectively with the Livret A.

  • Home Savings Plan (PEL) Locked in for a minimum of 4 years, except for the purchase of a home, which may limit flexibility for some savers.
  • Stock exchange Our Ravel Finance team can help you various investment and portfolio management services for stock market investments. These are more dynamic investments with a higher risk than a Livret A, but they also offer more attractive potential returns.
  • Tax relief FIP CORSE: FIP CORSE allows investors to invest in Corsican SMEs with a tax reduction of up to €30%, providing an opportunity to support the local economy while benefiting from tax breaks.
  • Savings account Livret Meilleurtaux: described as the best savings account, with no management or account-keeping fees, and no charges for opening or closing the account, Livret Meilleurtaux represents a no-fee alternative with easy access.

These savings and investment options offer a variety of choices to savers, each with its own advantages, risks and conditions, allowing an in-depth comparison with the Livret A for an informed decision.

Practical advice for maximising your interest in 2024

To make the most of the interest on your Livret A savings account in 2024, here are some practical strategies based on how interest is calculated and the best times to carry out your transactions:

  1. Strategic Deposits and Withdrawals :
    • Make your deposits on the last day of the month to maximise the interest you earn at the start of the following month.
    • For withdrawals, opt for the 15th day of the month, so that your funds continue to earn interest until that date.
  2. Optimisation of fortnights :
    • Interest is calculated on a fortnightly basis. For deposits made between the 1st and the 15th, interest starts to accrue from the 16th. For deposits made after the 16th, interest starts to accrue on the 1st of the following month.
    • To avoid losing interest, withdrawals should be made after the 1st or 16th, depending on the time of month.
  3. Management Calendar :
    • Plan your deposits so that they are ideally made on the 14th or 29th day of the month. This approach maximises the time during which your money earns interest, precisely in line with the fortnightly calculation schedule.

Are you looking for more profitable investments?

Don't let your savings stagnate with a fixed rate! At de Ravel Finance, we understand that each investor has unique objectives and is looking for investment opportunities tailored to their specific needs. That's why our team is dedicated to offering you personalised investment solutions, ranging from simple solutions to more dynamic strategies, potentially offering higher returns than traditional savings books.

With recognised expertise and a customer-focused approach, we are committed to maximising the performance of your portfolio while controlling the level of risk. If you would like to give your savings a new lease of life and explore wider, more rewarding investment horizons, contact our team today.