Why You Should Make Deposits into Your Livret A Savings Account
In February, French citizens deposited another 3.4 billion euros into their Livret A and LDDS savings accounts, bringing the total balance of regulated savings accounts to 571.5 billion euros.
This attractive return exceeds the inflation rate in France, which stood at 2.3% in March on a year-over-year basis. It has been more than three years since the Livret A savings account allowed households to maintain their purchasing power, as inflation had been eroding the real return on this tax-exempt investment.
In 2020, the annualized inflation rate was 0.5%, the same as the Livret A rate. However, last summer, the Minister of the Economy and the Bank of France decided to keep the Livret A rate at 3% until January 2025, thereby deviating from the calculation formula—which is based on inflation excluding tobacco and interbank rates—and from the rule of revising the rate every six months. If the rule had been strictly applied, the Livret A rate would have risen to 4.1% as of August 1, 2023.
Despite this, the Livret A and the LDDS currently offer a viable solution for investing short-term cash, with deposits and withdrawals possible at any time, subject to a minimum of 10 euros per transaction and a maximum of 22,950 euros for the Livret A and 12,000 euros for the LDDS. Interest earned is exempt from both income tax and social security contributions.
In February, French citizens deposited another 3.4 billion euros into their Livret A and LDDS savings accounts, bringing the total balance of regulated savings accounts to 571.5 billion euros.
