As the new year approaches, interest payments on regulated savings accounts like Livret A, LEP, PEL, and CEL are set to be released. These accounts follow a bi-weekly interest calculation method, with Livret A offering stable returns of 3% in 2024. LEP provides diminishing rates starting at 6% but dropping to 4% throughout the year. PEL and CEL are subject to a 30% tax on interest, impacting their net returns, with PEL allowing for higher maximum deposits compared to CEL.
As the year comes to a close, the transition from December 31 to January 1 brings with it the much-anticipated interest payments on regulated savings accounts. Curious about what you might earn from your Livret A, LEP, PEL, or CEL in 2024? Let’s break it down.
Understanding Bi-Weekly Interest Calculations
Regulated savings accounts such as Livret A, LDDS, LEP, PEL, and CEL follow a straightforward procedure based on the bi-weekly calculation rule. Interest accrues on the 1st and 16th of each month, determined by the current annual interest rate.
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For instance, if you deposit 100 euros into a Livret A with an interest rate of 3% on December 30, you will begin earning interest starting January 16 of the following year. Once the interest is credited, it enhances your account’s principal, facilitating further growth through capitalization.
Livret A and LDDS: Potential Earnings of €688.5
The Livret A remains a cornerstone of savings for over 80% of French households, maintaining a stable interest rate of 3% throughout 2024, making calculations straightforward:
- Saving €1,000 for the year yields €30 in interest.
- An average balance of €7,000 results in €210 in interest.
- For those at the maximum limit of €22,950, interest amounts to €688.5.
Additionally, the beauty of this interest is that it’s capitalizable, meaning it adds to your existing savings, allowing for the potential of earning even more in the future, even surpassing the regulatory limits.
LEP: Attractive Yet Diminishing Returns
The Livret d’épargne populaire (LEP), aimed at supporting low-income households, generally offers a more favorable return than the Livret A. However, its interest rate has seen multiple reductions in 2024, dropping from 6% at the start of the year to 5% in February, and then further to 4% in August.
- Depositing €1,000 yields €47.30 over the year.
- An average balance of €6,500 will generate €307.41.
- Those at the maximum threshold of €10,000 will receive €472.94.
PEL and CEL: Tax Implications on Interest
The Plan d’épargne logement (PEL) and Compte épargne logement (CEL) are worth noting as well. Unlike the tax-exempt accounts, these are subjected to a flat tax of 30%, impacting their overall returns:
- The PEL available in 2024 offers a gross interest rate of 2.25%, translating to a net rate of 1.58%. Therefore, a deposit of €1,000 will yield €15.8 net.
- The CEL, with a gross rate of 2% (1.4% net), would generate €14 net for the same amount.
However, the PEL provides a significant advantage with its high limit of €61,200, allowing for a maximum net interest of €966.96, compared to the CEL, which is capped at €15,300 and yields a maximum of €214.2 net.