In 2024, interest payments on Livret A and LDDS accounts reached a record 16.80 billion euros, driven by a 3% interest rate and increased deposits. Total balances grew to 603.1 billion euros, with December collections marking a peak since 2009. Despite a projected rate drop to 2.4% in 2025, the Livret A remains appealing due to its tax-free nature and inflation-beating returns. Meanwhile, the LEP saw slower growth, with a total balance of 82.2 billion euros.
Record Interest Payments in 2024
The previous year’s records have been surpassed, as the interest paid on both the Livret A and the Livret de développement durable et solidaire (LDDS) for 2024 reached an impressive 16.80 billion euros. This significant announcement was made by the Caisse des Dépôts (CDC) on Wednesday.
In an encouraging trend for French savers, deposits outpaced withdrawals by 21.42 billion euros. As a result, the total balance across these two tax-exempt savings accounts soared to a remarkable 603.1 billion euros as of December 31, 2024, marking an increase of 38.2 billion euros from the previous year (+6.8%).
This record interest was anticipated, given the unprecedented total amount combined with an attractive interest rate of 3%. Both banks and the Caisse des Dépôts are responsible for paying the interest on these savings accounts.
According to Olivier Sichel, interim managing director of CDC, the Livret A continues to be a highly appealing choice for the French populace because it is tax-free, offers guaranteed capital, provides returns that outpace inflation, and allows for complete liquidity. “I can deposit 100 euros this morning and withdraw it the next day without any hassle,” he remarked on Radio Classique.
To maintain this level of performance in the coming year, it will be essential for the total amount to compensate for the anticipated drop in rates to 2.4% for both savings accounts, which is set to take effect on February 1, 2025.
After a challenging autumn, December proved to be a strong month for the Livret A and LDDS, with collections reaching 3.93 billion euros. This surge allowed the net collection for these accounts to exceed the 20 billion euro benchmark for the year. Notably, the Livret A recorded its highest December collection since its launch in 2009.
Understanding Real Yield and Saving Trends
The popularity of regulated savings has remained robust since the lockdown of 2020, which led to reduced consumer spending. Although a normalization trend was noted in 2024 compared to the previous year, when savings increased by over 10%, the sustained interest rate of 3% coupled with declining inflation has helped the Livret A achieve a positive real yield. This means that as long as the interest rate surpasses inflation, savers can effectively grow their wealth.
Eric Dor, director of economic studies at IESEG School of Management, observed, “One might have thought that the decline in inflation could encourage households to spend more. However, prevailing uncertainties are driving people to save.” He pointed out that government changes, economic prospects, and geopolitical tensions all contribute to a culture of “precautionary saving.”
This unprecedented decline in rates since 2009 may intensify competition from life insurance contracts, especially euro funds with guaranteed capital. Even with a potential rate drop to 2.4%, Olivier Sichel believes the Livret A will remain appealing, as it still offers returns more than twice the rate of inflation, which is around 1%.
Philippe Crevel, president of the Cercle de l’épargne, noted that the ongoing political and economic uncertainties may lead households to keep their deposits high in the Livret A and LDDS accounts.
Meanwhile, the Livret d’épargne populaire (LEP), designed for modest savers, faced a less prosperous year in 2024, with a total balance of 82.2 billion euros, reflecting a 14.3% increase—significantly lower than the 50% surge seen in the previous year. Eric Dor commented on the limited saving capacity of this demographic.
While the net collection on the LEP slightly improved towards the end of the year, it remained well below 2023’s figures throughout 2024. The LEP will also see a rate adjustment on February 1, 2025, dropping from 4% to 3.5%, a decline that the government aimed to soften compared to theoretical predictions of 2.9%.
As for the number of LEP account holders, it has plateaued at 11.8 million by the end of 2024, far from the potential 19 million households that qualify. The Banque de France plans to facilitate the opening of one million more accounts this year.