Savings: is having a Livret A always useful? – Boursorama

With its return net of tax and its absence of risk, the Livret A appeals to the French. Yet, for nearly one in two owners, better alternatives exist. Update on this astonishing situation.

By MoneyVox,

With 0.50% net of return tax, the Livret A seems to be a viable alternative to taxed bank passbooks, term accounts, and even certain euro life insurance funds. But appearances are deceptive. While more than 8 out of 10 French people hold a Livret A, only half of them have any interest in using this investment. For others, more profitable alternatives exist, without taking any risks. What are they and who are they for

The Livret A, an investment that has the wind in its sails

Faced with health and economic uncertainties, the French have overwhelmingly chosen to save more than usual. Since the appearance of Covid-19, this dynamic has continued. At the end of July 2021, a new record was reached, with 344.4 billion euros deposited on all Livrets A. This unprecedented collection was announced by the Caisse des Dépôts et Consignations (CDC). Compared with March 2020, the start date of the coronavirus crisis, the outstanding amount increased by 12%, or 38 billion euros. And yet, the Livret A rate is at its lowest level: 0.50% net. However, it benefits from its notoriety largely acquired after 200 years of existence, its liquidity and its absence of risks, in a context where other guaranteed investments do not seem to do much better.

Should we really ignore bank passbooks?

Unlike Livret A, bank passbooks are unattractive. And for good reason: their average remuneration is 0.07%. However, some products are doing well. This is the case with the PSA Banque, MyMoneyBank and RCI Bank passbooks. Their interest rate is 0.60% gross, from which social and tax deductions should therefore be deducted. For households subject to income tax, passbooks are therefore less attractive than Livret A.

But in 2018, 43% of tax households were non-taxable according to the Directorate General of Public Finances (DGFIP). In this case, the bank books do at least as well as the Livret A. Indeed, only the social contributions remain due, at the rate of 17.2%, that is to say a final interest rate of 0.50% for a return initial 0.60% gross. By taking advantage of certain offers at boosted rates, frequent in particular with MyMoneyBank, it is thus possible to earn more with one of these investments than with the traditional Livret A. For all these households, requesting a deposit exemption is essential. To be sent to your bank by the end of November at the latest, this request makes it possible not to be charged with income tax on interest acquired on January 1 of the following year.

What about LEP in all of this?

The opening of a popular savings account is subject to a certain income limit. For example, for a couple with a child residing in metropolitan France, the reference tax income limit (RFR) in 2021 is 30,705 euros. Only 14.3% of French people have one … while nearly 50% of the population is eligible. However, it is remunerated at 1% net, or twice as much as the Livret A. The only downside: it will be necessary to be satisfied with a ceiling of 7,700 euros for the LEP, against 22,950 euros for the Livret A.