Fixed-term account rates rise in France

Fixed-term account rates in France have increased in recent months, according to the Bank of France. The gross remuneration for accounts with a two-year term or less rose from 2.30% in June to 2.38% in August, while longer-term contracts saw an increase from 2.85% to 2.90%. This follows a rate increase by the European Central Bank (ECB) in late summer, which set the deposit rate at 2.5%.

Banks compete for customer deposits

French banks are now actively trying to attract customer deposits, with some choosing to raise rates on fixed-term accounts (CATs) rather than on traditional savings accounts. Marc Tempelman, co-founder of the online savings platform Cashbee, explained that raising CAT rates is more attractive for banks because it affects only future deposits, not the existing ones, thus reducing their financing costs.

BNP Paribas offers high rate for short-term deposits

BNP Paribas is currently offering a fixed annual gross rate of 4% for a three-month fixed-term deposit ranging from 5,000 euros to 200,000 euros until November 1. This results in a net rate of 2.74%, which is significantly higher than the 1.7% offered by the Livret A until January 31, 2027. This move highlights the growing competition among banks to attract deposits.

Fixed-term accounts vary widely in features

While the remuneration of fixed-term accounts is a key factor, other characteristics should also be considered before investing. Traditional banks often do not highlight these accounts on their websites, and in many cases, customers need to consult an advisor to learn more. Some banks, like LCL, have been reluctant to provide information on their fixed-term account offers.

Understanding fixed-term accounts

Fixed-term accounts, or CATs, are short- to medium-term investments, typically ranging from 1 month to 5 years. A sum of money is deposited with a bank for a fixed period in exchange for a predetermined interest rate. Each bank offers its own terms, making it challenging to compare options. The Gross Annual Actuarial Yield Rate (TRAAB) is the key indicator to consider when comparing different CATs.

Variations in interest rates across banks

Interest rates for fixed-term accounts vary significantly between banks and durations. For example, a 1-month CAT offers 2.22% at Hello bank !, 2.45% at SG, and 2.53% at BNP Paribas. For a 3-month CAT, the rates are 2.22% at Hello bank !, 2.58% at SG, and 4.06% at BNP Paribas. These differences highlight the competitive landscape among financial institutions.

Minimum deposit requirements vary

The minimum deposit required for a fixed-term account varies widely among banks. Unlike traditional savings accounts, which often require as little as 10 euros, fixed-term accounts typically require much higher amounts. For example, Distingo Bank and BoursoBank require a minimum of 1,000 euros, while La Banque Postale and Hello bank ! require 10,000 euros. These high thresholds make fixed-term accounts more suitable for well-off households.

Early withdrawal penalties exist

Money deposited in a fixed-term account is not entirely blocked, but withdrawing it early comes with penalties. The time to recover the principal can be up to 32 days, and no interest is paid if an early withdrawal is made within the first month of the contract. Penalties vary depending on the bank and the length of time the money has been deposited.

Choosing the right fixed-term account

Selecting a fixed-term account involves more than just looking at the interest rate. Factors such as the investment horizon, the minimum deposit required, and the penalties for early withdrawal must also be considered. These aspects can significantly impact the overall return and suitability of a fixed-term account for an individual's financial goals.