3% rate on France’s main regulated savings account to stay this year

The tax-free 3% interest rate on France’s main state-regulated savings account, the Livret A, is to remain in place until at least January 2025.

This was the government’s original plan announced in mid-2023 but it was contested by a law professor, Paul Cassia, through the court appeals system.

Mr Cassia claimed it was unlawful to pin the interest rate in place for so long as it is usually calculated twice-annually based on the economic situation during the previous year, most notably the level of inflation.

The Conseil d’État (France’s highest appeal court), however, rejected the claim, arguing that the Banque de France and Economy Ministry were within their right to suspend the usual measurements.

Why was the appeal denied?

Since 2021, a decree has been in place that the interest rate for the Livret A must be updated every six months based on the economic situation of the last year, which is then approved by the Economy Ministry.

In July 2023, however, the government announced its most recent calculation would remain in place until January 2025 (so for at least 18 months) before being reconsidered.

It said this was to protect against the interest rate dropping below this level based on the economic situation immediately after the Covid lockdown.

However, the calculations usually used would have resulted in an interest rate of 4.1% between August 2023 and January 2024, and a projected 3.0% between January and July of this year – higher than the 3% level imposed.

Mr Cassia, a lecturer at Sorbonne university, had already filed his appeal before this, but used this information to claim the move was unfair.

The Conseil d’État however ruled that this was irrelevant, and the rate had been frozen in “exceptional circumstances.”

The measures were justified because a number of financial institutions, including those involved in building and maintaining social housing, borrow money from the Caisse des Dépôts at the rate of the current Livret A interest amount, and if this dropped too low it could have sparked worries in the sector.

Read more: What changes in France in 2024 for money, tax and banking?

What is a Livret A?

The Livret A is a regular savings account open to anyone with a French bank account (including online banks).

There is a maximum limit of €22,950 that can be held in the account, but funds can be transferred freely and instantly between this account and your current account.

As mentioned, the interest rate is controlled by the Banque de France and approved by the Economy Ministry..

Interest is calculated on the 1st and the 16th of each month, and then paid out at the end of the year in one lump sum.

There are around 56 million Livret A account holders in France – however, you are only allowed to hold one account per person, and when you open one must sign a contract agreeing to this.

The contract also informs you of the other information regarding the account.

Other regulated accounts include the Livret de Développement Durable et Solidaire, and the Livret d'Epargne Populaire (LEP) available to people on lower incomes.

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