Savers eagerly await interest payments from various savings accounts as the new year approaches, with projections exceeding 20 billion euros for Livrets A, LDDS, and LEP. French households maintain a high savings rate of 18.2% but may see a decline in 2025 due to falling interest rates. The Livret A rate is stable at 3%, while the LEP and other accounts are expected to experience gradual reductions, reflecting changes in inflation and market rates.
Anticipating Savings Account Interest Payments
The excitement surrounding savings account interest payments can be likened to the festive anticipation of Christmas. With the new year approaching, savers are just days away from receiving their earnings from popular savings products like Livret A, Livret d’épargne populaire (LEP), Plan épargne logement (PEL), Livret de développement durable et solidaire (LDDS), and Compte épargne logement (CEL). Just as in previous years, banks will process these payouts overnight from December 31 to January 1. This year, projections suggest a staggering total of over 17 billion euros for Livrets A and LDDS alone, and even surpassing 20 billion when including the LEP, according to the latest reports from Caisse des dépôts.
Trends in Household Savings and Future Rate Adjustments
In 2024, French households have continued to prioritize saving, maintaining high levels of savings following exceptional years influenced by lockdowns and notable increases in returns. Data from Insee reveals that the savings rate reached 18.2% of gross disposable income in the third quarter of 2024, a significant rise compared to the average of 15 to 17% recorded from the early 2000s until the end of the 2010s. However, a slight decline in savings is anticipated for 2025, mainly due to decreasing interest rates.
The interest rate for Livret A has been held steady at 3% for 18 months, starting from August 1, 2023, and set to last until January 31, 2025. For an average balance of 5,000 euros, this results in earnings of approximately 150 euros. Conversely, the LDDS interest rate is adjusted based on the inflation rate and interbank rates over the past six months, with revisions occurring biannually in January and July. Following a historic high of 7% in February 2023, the consumer price index has been on a downward trend. The Banque de France forecasts an expected rate of 2.4% for 2024, with projections indicating it will sustainably remain below the 2% mark: 1.6% in 2025, 1.7% in 2026, and 1.9% in 2027. On February 1, the Livret A rate is anticipated to settle around 2.5%, as indicated by Eric Lombard, the general director of Caisse des dépôts, who has recently taken on the role of Minister of Economy. The LDDS will mirror this trend.
The LEP is also expected to see a gradual decline in its rate: from 6.1% between February and July 2023, it decreased to 6% from August 2023 to January 2024, dropping further to 5% for the period from February to July 2024, and reaching 4% until January 2025. This rate corresponds to the higher value between the average inflation of the previous six months and the Livret A rate plus 0.5%. As a result, the LEP rate could potentially be set at around 2.9% starting February 1. The remuneration rate for PELs will be 1.75% in 2025, down from 2.25% for those opened in 2024. It’s important to note that this reduction does not apply to plans initiated before January 1, 2025, as PEL rates are locked in at the time of opening. Lastly, the CEL has maintained a gross interest rate of 2% since February 1, 2023, a rate that remains unchanged throughout the account’s lifespan. Unlike the rates for Livret A, LEP, and LDDS, it’s worth mentioning that the rates for PEL and CEL are gross, not net of taxes.