11 million savers will have their income cut if they have this famous savings account

19 million households are entitled to a very favorable savings account. However, the income they can get is at risk of a sharp decline.

Regulated tax-free savings accounts with particularly attractive interest rates are starting to lose their luster. As inflation gradually slows, the strong attractiveness of regulated savings accounts declines. However, for two years, under the influence of rising prices, the government significantly increased the rates of savings products such as Livret A or Livret d’Épargne Populaire (LEP).

LEP is enjoying significant success. Currently, 11 million French people have it, while in 2021 there were only 7 million. This LEP boom can be explained by the sharp increase in the interest rate, which climbed above 6% in 2023, while the inflation level for the same period of the year was estimated at 5% according to INSEE. The principle of LEP is to offer an interest rate higher than inflation. It is clear that this savings account is the only one that does not cause its owners to lose money, despite the context of general price increases.

The LEP interest rate is revised, as with other regulated savings accounts, every six months: in February and August. It is recalculated according to the current level of inflation. However, as inflation declines in mid-2024, the LEP rate could follow this trend. In theory, the LEP rate could even drop to 3% on August 1, which would represent a halving of the 2023 rate, but it is likely that the new rate will be slightly higher.

Indeed, the government is still ensuring that the LEP remains attractive. Last February, the rate was supposed to drop to 4.4%, but the executive raised it to 5%. The rule set by the decree states that the minimum LEP rate must be at least 0.5 points higher than the Livret A interest rate, which remains fixed at 3% as of August 1. The LEP rate should therefore be 3.5% from this date.

Specifically, with 1,000 euros in LEP, a saver could previously earn 50 euros per year. If he kept €5,800 in his LEP, which is the average balance of this type of savings account in France, he could pocket €290 in one year. At a rate of 3.5%, the LEP will bring in just €35 a year for someone who puts €1,000 into it, and €203 if the saver has an average debt of €5,800.

As a reminder, the LEP is intended for people on low incomes whose reference tax income does not exceed €21,393. According to the Banque de France, 8.6 million French people who are eligible for an LEP have still not opened one.

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