Maximizing Return on Savings: Why Investing in a Savings Account is Crucial

2023-10-29 13:03:50

Established at 4.9% since last September, inflation continues to erode the purchasing power of low-income households. However, this surge in prices is proving favorable for savers, who have notably benefited from the revaluation of the Livret A rate to 3%, whereas it was at a rate close to 0% a year and a half ago.

Why there is no return on money placed in a current account

In France, banks do not remunerate their customers for the sums held in their current accounts. In question, an old agreement between the banks and the government establishes free checks in exchange for the absence of remuneration. Today, and given that free checks are no longer an advantage, since this method of payment is less and less common, this arrangement is no longer favorable for the government.

In addition to a non-existent return, placing money in a current account generates account maintenance fees, agios, as well as other charges. However, the bank continues to use this money to make investments and generate profits, without passing it on to their customers. This is why it is recommended to move this money into a savings account.

Due to the increase in interest rates on savings accounts, such as the Livret A and the LDDS, it is more than ever recommended to invest in one of these investments. These are risk-free savings solutions guaranteed by the government, with an attractive return. Also, these savings accounts are liquid, which means that it is possible to transfer money to your current account at any time.

However, savers are required to take into account the fortnight rule, according to which the calculation of interest takes place on the 1st and 16th of the month. Clearly, it is recommended to avoid deposits and withdrawals during this period, in order to take full advantage of the return. The tax authorities, therefore, encourage you to move your income from the current account to one of these savings options before the end of October, because, by making the investment following November 2, the calculation of interest will not begin before the 16th.

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