Have you ever noticed that your current account does not pay for your savings, while the Livret A if? Keeping your money in the current account is a mistake: it only benefits the banks, which take advantage of it to make this capital grow, without having to remunerate their customers.
Rather than leaving it there, without doing anything, it is therefore better to remove it and place it on a liquid product, without risk and profitable. This is the case for example of Livret A or LDDS, two investments guaranteed by the State, which currently provide an interest rate of 3% net per year.
The money deposited on these can be withdrawn at any time: in the event of an incident, you can recover this savings without waiting to transfer it to the current account and use it instantly. In the meantime, you will have been able to make it grow to generate income on your dormant savings.
Keep as little as possible in the current account
In some countries, banks offer interest-bearing current accounts to their customers. In France, this is unfortunately not the case. This standard dates back to the 1960s when banks and public authorities had agreed on a principle: the former would not remunerate current account deposits in exchange for not charging for checks and account maintenance.
However, the context has evolved since checks and cash have lost their popularity to the detriment of the bank card. However, the banks are still satisfied with the situation, while younger financial players such as the neo-banks Bunq or Wise now offer French individuals remuneration on their current account (1.31% gross with the first, 0, 65% gross at the second).
If you are with Société Générale, BNP Paribas or Crédit Mutuel, however, you should not expect to see your current account being remunerated anytime soon. It is therefore better to take the proactive step of moving your funds from the latter to a liquid savings account with the least risk. With rising interest rates, your capital can quickly generate an attractive return.
Why withdraw it before the end of April?
Another French exception: the rule of fortnights. In an exchange with the media Boursorama, the economist Philippe Crevel points out that “France is one of the rare countries to practice this method of calculating interest”. In most countries, interest on savings accounts is calculated daily and paid out at the end of each month.
Not only does France pay the interest only once, at the end of the year, but there is also a rule on deposit and withdrawals: the rule of fortnights. If you deposit money from your current account into the Livret A, interest will only be calculated from the following fortnight (which starts either on the 1st or the 16th of the month).
In other words, if you deposit your money on May 5, you will not earn interest between May 5 and May 16. On the other hand, if you withdraw your money from the current account to place it on the Livret A before April 30, the interests will be calculated from May 1. This means that if you deposit money before the end of the month, you can save 15 days compared to a deposit in the first half of May.
Thread: The savings account
Hello #Twitter237 as promised, I’m doing a thread on the notion of a fortnight’s savings account.
Have you ever looked at your account and not understood why the interest generated is less or non-existent. This concerns you— Joel Tahoue (@JoelTahoue) January 21, 2019
The rule is the same for withdrawals: if you do not complete a full fortnight, you will not earn interest. It is therefore better to wait until the end of a fortnight to withdraw your money from the Livret A. That said, if you urgently need money in your account, the funds placed in the Livret A are available at any time: you can always withdraw it, even if it means losing a few days of interest.
For security, you can always keep a certain amount in your current account. In general, people leave approximately one month’s salary on the latter to deal with the uncertainties. However, do not leave more, because you will lose on the exchange. With inflation above 5% over the last year, not making your available capital work further penalizes your standard of living.
