Livret A 2023: why should the new rate make people cringe on August 1?

LIVRET A. The Livret A rate will increase from August 1, 2023. However, this increase is not really good news for French savers. Explanations.

[Updated on May 15, 2023 at 2:46 p.m.] From August 1, 2023, the rate of the Livret A will mechanically increase. Good news for savers? Well not that much, because this increase should be below expectations. Indeed, if we refer to the calculation taking into account the level of inflation and the average of the interbank rates, the rate of the preferred savings product of the French should be around 4.3% this summer. However, according to Philippe Crevel, Director of Cercle de l'Epargne, "a rate of around 3.5% is undoubtedly probable" as indicated in his "Eco Letter" of May 6.

As a reminder, with the previous increase in the rate from 2% to 3% on February 1, the livret A recorded its best first quarter since 2009. This explains the reluctance of banking establishments in the face of this potential new increase. The latter have already undertaken a vast lobbying campaign to prevent households from depositing even more money on this booklet which is regaining color, and not to let its rate soar too quickly. Verdict in mid-July 2023 for the officialization of the new Livret A rate.

The ceiling of the booklet A is set at 22,950 euros, for individuals. However, interest payments may exceed this limit. As an indication, associations benefit from a higher ceiling, at 76,500 euros. Anyone, whether minor or adult, can open an A booklet. On the other hand, it is not possible to hold several 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.). Since 2012, it is not possible to transfer a livret A from one bank to another. You must first close the first booklet, then open another booklet in a bank. It is forbidden to combine two regulated booklets of the same type (Livret A and Livret Bleu) for the same person.

On the other hand, it is quite possible to combine a booklet A with a Sustainable Development Booklet (LDD) or a youth booklet. In addition, it is possible to combine regulated booklets within the same tax household. To close a livret A, simply contact your banker, by mail or by going to an agency. You will need to 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.

The Livret A rate will increase from 2 to 3% on February 1, 2023, as announced in mid-January by the Minister of the Economy Bruno Le Maire. As a reminder, the rate had doubled on August 1, 2022 from 1% to 2%. The primary objective of this increase is to offset the galloping inflation observed in recent months in France (nearly 6% over one year in 2022).

The passbook A rate was increased to 2% in 202 and to 3% on February 1, 2023. In other words, when you benefit from savings of 1,000 euros, you pocket 30 euros in interest against only 20 euros in interest with the old remuneration set at 2%. Find out how much interest you earn, based on your savings:

The calculation of the interests of the livret A occurs on the 1st and 16th of each month, therefore every fortnight. Clearly, if you deposit money on your Livret A between the 1st 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 for the month following so that the date of the value is taken into account in the calculation of the interests. Did you make a withdrawal? Interest is calculated over 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 multiply the balance of your savings account 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 booklet.

Any person, major or minor, can have a livret A. The banking establishment in which you wish to subscribe to the livret A must question the tax authorities to verify that you only have one. The property cannot open a booklet for you until they have this response.

Next, you must provide your institution with an ID and proof of address that is less than three months old. For minors, remember to bring a copy of the family record book or a birth certificate. The signature of one of the parents will also be required.

Good to know, a minimum payment of 10 euros is required when opening the account, an amount which drops to 1.50 euros at the Banque Postale. Depending on the banking institutions, various means of payment are accepted to make this payment, check, cash or transfer. Most banks now offer the opening of a 100% online savings account, or in an agency if the customer wishes.

Previously reserved for customers of Caisse d'Epargne, Banque Postale and Crédit Mutuel (under the name livret bleu), the livret A can be offered by all banks, including online banks, since 2009.

It is not possible to transfer a livret A from one bank to another since January 1, 2012. This transfer was possible from January 1, 2009 to December 31, 2011. From now on, it is necessary to close your livret A in the old bank before opening a new one in another banking establishment. If you have forgotten the existence of a livret A and the account has remained inactive for 10 years, it is automatically transferred to the Caisse des dépôts which keeps it for 20 years. You have the possibility of searching for free if you are the holder of a booklet A that you have forgotten, and thus, make a request for the remaining amount to be returned to you.

So what is the role of an A booklet? The latter can be likened to precautionary savings, in addition to their current account. It is advisable to place two to three months of salary on his booklet A. But other solutions exist to save, some of which have seen their rate greatly revalued like the LEP. Subject to a means test, the LEP is a guaranteed investment reserved for people domiciled in France and whose resources are limited (20,296 euros of reference tax income for a single person, 31,135 euros for a couple). Its rate, located at 4.6%, will also be reassessed due to galloping inflation. A big boost for LEP which should reach a rate of 6.1%! The LEP ceiling is set at 7,700 euros, excluding capitalized interest. Its extremely attractive rate could well make it a real alternative to the Livret A account in the eyes of savers. Are you eligible for LEP? In France, 15 million people can benefit from it. Remember that the livret A, like the LEP, remains a tax-free savings product. Interest earned by savers is not subject to income tax or social security contributions.

Do you have a little extra nest egg and are looking to explore savings and investment products that will help your money grow? Consult our file to know the alternatives to the booklet A!

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 security contributions. The Livret A also allows you to make transfers and withdrawals without a limit on the number, and free of charge. Finally, it allows the saver to have capital available immediately.

To close your booklet A, two possibilities are available to you. Send a letter to your bank, or go directly to an agency. In all cases, you must specify the references of the passbook A and the account number where the sums remaining on the passbook must be deposited. Your bank must close your account within 15 working days. To be able to prove the date of receipt of the request by the bank, you must send the letter by registered mail or ask for an acknowledgment of receipt at the counter. If the livret A is closed during the year, interest over the period since the beginning of the year is credited on the day the account is closed.