What's a Livret A Savers Account in France?

What's a Livret A in France?

Livret A is a simple savings account with instant withdrawal access that's historically been very popular in France, a kind of on demand tax free savers account, similar to an ISA.

In May 2022, there were 55 million accounts holding a total amount of 358,8 billion euros between them.  French families felt confident in these government backed accounts that are easy to open while making a difference for the country. They are a great idea for kids and grand kids; for the first car or a deposit on a house later.

Why is this Big News in France?

There were important news last month when the French Finance Minister, Bruno Le Maire, announced that the interest rate for the Livret A will be raised to 3% (from 2%), after the National Central Bank (La Banque de France) suggested the hike. And it's proving to be a huge success with savers, more than 9Bn euros were deposited in Livret A saving accounts in January, the highest for 14 years (source le Figaro 2/2023).

The Highest Rate for 15 Years

The annual interest rate has been going down steadily in the last decade. In 2010, the Livret A had an annual rate of return of 4%. Two years later it had fallen to 2,25%, by 2015 to just 1%, by 2016, it had fallen to 0,75% and by 2020, the annual return rate was down to 0,5%.

Due the inflationary pressures at the start of 2022, the rate was increased to 1% in February 2022, which then doubled to 2% in August, the highest rate in nearly 10 years. Today at 3%, the rate is the highest it's been for 15 years (source Service-Public).

Is the Livret A a new Product?

Non, the Livret A was established in 1818 by King Louis XVIII to pay for debts incurred by Napoléon during his conquests. The funds were held and re-invested through the Caisse des Dépôts.

In the 19th century the funds were used to build railroad tracks and canals throughout the country. Between World War I and World War II, to install electricity in rural France. Since then, it has mostly been used to build social housing.

How is the Rate Calculated?

The Livret A rate is calculated twice a year (January and July) by taking the average between the average inflation rate from the last six months and, the average of the interbank short term rates. The new rate of 3% was applied on the 1st of February, the month following the decision from the Ministere des Finances taken in January.

Interest is calculated on the 1st and 16th of each month and paid in one instalment on December 31st. They are simply added to your capital.

Can Anyone Open an Account?

Any adult or child can open and hold a Livret A, it's common for every member of a family to have one. The account is limited to a maximum amount of €22,950 per person/account. Any interest earned is exempt from French income tax as well social charges. And there is no residence qualification for a Livret A savings account.

How and Where Can You get a Livret A?

Until 2008, La Poste and the Caisse d'Epargne had the monopoly for all Livret A accounts, not any more. All French banks now offer this saving account at the same rate as it's regulated by the state.

If you already have a bank account in France visit your account online and search for 'épargne', or talk to someone at your local branch. You could also walk to the village post office which may be easier or visit La Poste website, their minimum payment amount is just 1,5€.

How to Deposit or Take Money Out?

All the money in a Livret A is available at any time. From the age of 16, anyone can withdraw money, unless parents or a legal tutor has decided otherwise. The minimum  for a deposit or a payment is 10€ (1.5€ for La Poste), most transactions are made online or at the bank or post office in person.

One of the easiest way to save money regularly is to commit to an amount and set up a monthly direct debit. If you earn income abroad, you could set up a regular payment with our currency experts, either direct to your bank account or to your savers account or both, they are usually much cheaper than high street banks or the post office.

Do I get a Bank Card? How to Close my Account?

You will not be issued a cheque book or bank card. Note that as with any saving account, the Livret A cannot go in the red.  To close your account, you need to pay a visit to your bank in person to inform them of your decision or you can post a simple letter by post.

For more information here's the link to the French governments' website, but hopefully we covered most of your questions above. You're welcome.