LIVRET A. Frozen for two years at 0.5%, the rate for livret A should be revised upwards on February 1, 2022.
[Mis à jour le 03 janvier 2022 à 10h06] On February 1, 2022, the rate of the livret A, frozen since February 2020 at 0.5%, should increase. In mid-December, the Minister of the Economy confirmed that the rate of the preferred savings product of the French will indeed be increased, due to high inflation. In detail, it is now up to the Governor of the Banque de France to formulate a proposal in mid-January. But will small savers be the winners? It is estimated that the new rate for the livret A should be between 0.7% and 1%.
The Livret A is a regulated savings account. It is used to finance social housing, while the LDDS is dedicated to financing the social and solidarity economy. The Livret A is an account free of charge and the interest of which is exempt fromincome tax and social security contributions. It has the advantage of being secure and liquid. Do you have a little extra nest egg and are you looking to study savings and investment products that would allow your money to grow? Consult our file to know the alternatives to the Livret A!
The limit of the livret A is set at 22,950 euros for individuals. Keep in mind that this is the payment limit. The addition of interest may well exceed this limit. As an indication, associations benefit from a much higher ceiling, at 76,500 euros. Anyone, whether minor or major, can open an A booklet., it is not possible to have more than one in different establishments. To open a livret A, you must sign a written contract with your bank, detailing the authorized operations (transfer, payment, withdrawal, etc.). It is forbidden to combine two regulated booklets of the same type (A booklet and Blue booklet) for the same person.
On the other hand, it is quite possible to combine a livret A with a Sustainable development booklet (LDD) or a young booklet. In addition, it is possible to combine regulated passbooks within the same tax household. To close a livret A, all you need to do is contact your banker, by mail or by going to a branch. You must specify the reference of your livret A and fill in the details of your current account, LDD, CEL … or other account to which you wish to transfer the funds. In the event of closure during the year, capitalized interest is credited to the account on the day it is closed.
How is the interest on the Livret A calculated?
The calculation of the interest of the livret A occurs the 1er and 16 of each month, so every fortnight. In other words, if you deposit money on your livret A between 1er and the 15th of the month, the calculation will be effective from the 16th. If you make a deposit between the 17th and the end of the month, you will have to wait until the following month for the date of the value to be taken into account in the calculation of interest . Have you made a withdrawal? Interest is calculated for the current period.
The total interest is added to the capital at the end of the year. When you want to calculate your interest, you should therefore multiply the balance of your passbook by its rate and divide it by 24 (number of fortnights in the year). But beware, this calculation has only a theoretical value. To calculate your return, you must take into account all the movements made on the book.
After being lowered to 0.75% on February 1, 2018, the Livret A rate has now been frozen at 0.5% since February 1, 2020. As a reminder, the rate is set by the Ministry of the Economy and of Finance on the recommendation of the Banque de France, according to a mathematical calculation taking into account the level of inflation and interest rates. However, the latter are extremely low at the present time.
How to justify such a low rate? Last year, the Minister of the Economy, Bruno Le Maire, invoked the necessary construction of social housing, an objective at least delayed due to the health crisis of the coronavirus. De facto, the real return on the livret A is now negative, since inflation is above 0.5%. However, should we expect to lose a lot of money on a Livret A? The effects are limited, in theory. With an outstanding amount of 10,000 euros, a saver should lose 25 euros over one year, estimated the Cercle de l’Epargne last year. So what to do with his Livret A? It is often advisable to keep your Livret A, as a sort of anteroom to your current account, on which you can place two to three months’ salary. This savings will constitute your precautionary savings.
This is one of the advantages of this regulated savings product. The interests of the livret A are exempt from income tax. They are also not subject to social contributions.