19 million French people could benefit from this very profitable savings account but bankers avoid talking about it
Bankers are careful not to tell their customers about it, but the least-used savings account offers a particularly attractive interest rate.
This savings account scares the banks. And for good reason, almost a third of the French can beg to take advantage of it. However, “bankers are not necessarily interested in a significant part of the population benefiting from these savings accounts, because they are too expensive for banking institutions”, explains Philippe Crevel, economist at the Cercle de l’épargne.
Indeed, the savings account in question is one of the most profitable that currently exists in France. Throughout 2023, it allowed all its beneficiaries to avail particularly attractive interest rates. The average return on this banking product in 2023 was about 6%, while the inflation rate was estimated at 5% in the same year, according to INSEE. Clearly, “This savings book is the only book that, despite being inflation-adjusted, does not cause its holders to lose money,” summarizes Philippe Crevel.
While the interest rate on this banking product should be reduced to 5% on February 1, 2024, its yield should remain above the level of inflation, as INSEE predicts a 3.8% increase in prices this year. Although this investment is very beneficial for savers, it is significantly more expensive for banks. Because they are the ones who must ensure the remuneration of the interest on this book, and therefore absorb the cost.
The earnings generated by this savings account is not its only benefit. Like Leverate A, the amount held is tax-free and no social security deduction applies to the interest generated. Many factors contribute to the success of this savings account, popularly called the Savings Account (LEP). “The popularity of LEPs has skyrocketed recently as in 2023 there will be more than 10.1 million French people who own one, compared to just 6.9 million in 2021,” notes Philippe Crevel. “Now, the LEP represents 58.2 billion euros in total arrears, or 54% more than 20 months ago,” added the economist.
However, the reputation of the LEP still needs to be completed. According to Banque de France, more than 8.6 million French people eligible for LEP have still not used it. So should we point to savers’ lack of knowledge on this topic? Circle of Savings economist, Philip Crevel, leans more towards a “deliberate lack of communication on the part of banking institutions”. Indeed, “banks do not introduce LEP to their customers, despite government incentives, because they believe that this savings product costs them too much,” the expert explains. As a reminder, LEP is accessible to all low-income earners whose reference tax income does not exceed 21,393 euros.
