This account offers attractive remuneration on the condition that the money is blocked for a certain period, which is fixed at the signing of the contract.
Do you know the term account (CAT)? In return for the placement of a blocked sum for a fixed period, it allows you to benefit from attractive interest rates.
How does it work, how to open it and what is its taxation? We tell you everything.
Term account: the characteristics
Here are the requirements by this savings product :
- the sum is invested for a fixed term, at least 1 month and at most 4 years. this duration is subject to negotiation between the financial institution and the saver, in other words you;
- the money remains blocked for the time fixed in advance, and cannot be released under pain of penalties;
- but the interest lies in an interest rate generally more attractive than offered by other traditional savings products;
- it is most of the time a single payment which constitutes the total amount of the account for the duration of the “blocking”.
Different types of CAT
Here are the different term accounts:
- Fixed rate, the most common: the rate is known and fixed in advance in the contract. Interest is paid in one installment at the end of the contract;
- Progressive rate, meaning that the rate of pay increases each quarter, semester or year;
- At an adjustable rate: it will be indexed to a market rate or a benchmark index such as Euribor or the rate of similar Treasury bonds (OAT).
Open a CAT
As we have already explained, it is at the bank that the latter and the saver negotiate the duration of the opening of the account, the single amount to be paid, and the interest rates to be applied.
The financial institution is required to provide the saver with clear and unambiguous of the investment. When the rate is variable, the bank must formalize the information in a specific document then during the contract by providing the saver with periodic updates on the status of the subscribed account.
Taxation of the term account
The website of the Ministry of the Economy specifies that “Interest received via a CAT falls under the tax regime for income from movable capital and is subject to the single flat-rate levy (PFU), at the rate of 30% (12.8% for income tax and 17.2% for social levies)”.
